OSI RESTAURANT: Higher Leverage Cues S&P to Downgrade RatingsPAC-WEST TELECOMM: Section 341(a) Meeting Continued to July 11PACIFIC LUMBER: May Continue to Use Cash Collateral Until June 22PACIFIC LUMBER: Scopac May Use Cash Collateral Until August 31PACIFIC LUMBER: Noteholders to Appeal Scopac Single Asset Order

AFFILIATED COMPUTER: Suspends Exclusivity Agreement with Cerberus-----------------------------------------------------------------Affiliated Computer Services Inc. has reached an agreement withDarwin Deason, the holder of approximately 42% of the company'soutstanding voting stock and chairman of the board of directors,and Cerberus Capital Management LP, to suspend the ExclusivityAgreement between Mr. Deason and Cerberus.

The suspension of the agreement will enable the company, under thedirection of an appointed Special Committee of independentdirectors, to consider the sale of the company, which it considersto be in the best interests of the company and its stockholders.

On March 20, 2007, the company received a proposal from Mr. Deasonand Cerberus to acquire all of the outstanding shares of thecompany's common stock, other than certain shares and options heldby Mr. Deason and members of the company's management team thatwould be rolled into equity securities of the acquiring entity,for $59.25 per share in cash. Mr. Deason and Cerberussubsequently increased the offer price to $62 per share in cash.

In connection with their proposal, Mr. Deason and Cerberus enteredinto an Exclusivity Agreement, dated March 20, 2007, pursuant towhich Mr. Deason agreed to work exclusively with Cerberus tonegotiate an acquisition of the company.

Pursuant to the terms of a Waiver Agreement, dated as of June 10,2007, between Mr. Deason, Cerberus and the company, from June 16,2007 through Aug. 9, 2007, the Special Committee and its financialadvisors, Lazard Freres & Co. LLC, will be soliciting indicationsof interest in a transaction involving the company, permittinginterested parties, including Cerberus, to conduct due diligence,and having discussions with such interested parties regardingpotential transactions involving the company, well as consideringall other strategic alternatives available to the company.

Also during this period, Mr. Deason will be free to havediscussions and negotiations with parties other than Cerberusinterested in a potential transaction with the company. If thecompany enters into an agreement with a party other than Cerberuson or prior to Aug. 19, 2007, the Exclusivity Agreementterminates.

Under the terms of the Waiver Agreement, the company willreimburse Cerberus for up to $7.5 million of documented out-of-pocket expenses incurred by Cerberus in connection with itsproposal. In addition, if the company enters into a transactionwith another party, the company will pay Cerberus $15 million uponconsummation of that transaction if, at the time the transactionis signed or closed, Cerberus has not withdrawn its proposal toacquire the company, has not reduced its offer price below$62 per share or otherwise modified its proposal in a manner thatis materially adverse to the company, and is diligently pursuingan acquisition of the company. Mr. Deason will pay Cerberus 40%of the positive difference between the value of what Mr. Deasonwill receive in a transaction consummated with another party andwhat Mr. Deason would have received under the Cerberus proposal.

The Special Committee believes that the terms of the WaiverAgreement will enable it to conduct a process for consideringstrategic alternatives available to the company, including apotential sale of the company that it considers to be in the bestinterests of the company and its stockholders. There is noassurance that the process undertaken by the Special Committeewill result in any transaction, including a transaction with Mr.Deason and Cerberus or any other parties.

Interested parties in exploring a potential transaction with thecompany may contact the Special Committee's financial or legaladvisors:

Headquartered in New York City, and established in 1992, CerberusCapital Management LP is one of the world's leading privateinvestment firms with approximately $25 billion of capital undermanagement in funds and accounts. Through its team of investmentand operations professionals, Cerberus specializes in providingboth financial resources and operational expertise to helptransform its portfolio companies into industry leaders for long-term success and value creation. Cerberus has offices in LosAngeles, Chicago and Atlanta, well as advisory offices in London,Baan, Frankfurt, Tokyo, Osaka and Taipei.

About Affiliated Computer Services

Headquartered in Dallas, Texas, Affiliated Computer Services Inc.(NYSE: ACS) -- http://www.acs-inc.com/-- is a FORTUNE 500 company. It provides business process outsourcing and informationtechnology solutions to world-class commercial and governmentclients. The company has more than 58,000 employees supportingclient operations in nearly 100 countries.

* * *

As reported in the Troubled Company Reporter on March 29, 2007,Fitch Ratings placed Affiliated Computer Services Inc. onRating Watch Negative after the proposed offer from Darwin Deason,founder and current chairman of ACS, and Cerberus CapitalManagement L.P. to acquire the company in a leveraged buyouttransaction valued at $8.2 billion, including existing debt.

AFFINITY GROUP: Moody's Junks $106.3 Million Senior Notes---------------------------------------------------------Moody's Investors Service rated at Ba2 (LGD2, 15%) the bank loanadd-on of Affinity Group Holding, Inc. Moody's also downgradedthe bank loan to Ba2 (LGD2, 15%) from Ba1, the senior subordinatednotes to B3 (LGD4, 59%) from B2, and the holding company notes toCaa1 (LGD5, 89%) from B3. Affinity has temporarily upsized theterm loan by $25 million (with provision for another $25 million),with proceeds used to repurchase senior subordinated notes. Thecompany intends to sell the Camping World retail segment toFreedomRoads Holding Company, LLC, an unrated entity that operatesRV dealerships and that has a common controlling shareholder withAffinity, and use cash proceeds from the divestiture to repay theterm loan in full. The rating outlook is stable.

This rating is assigned:

-- $50.0 million add-on to the senior secured term loan at Ba2 (LGD2, 15%);

The rating on the term loan will be withdrawn if it is repaid infull using proceeds from the retail segment divestiture.

The corporate family rating assignment of B2 reflects Moody'sopinion that credit metrics and operational risks are likely to beconsistent with a B-rated issuer in the printing & publishingindustry following the pending divestiture of the sizable retailsegment. In particular, driving down the rating are Moody'sbelief that high motor fuel prices will continue to pressuredemand for goods and services directed towards the recreationalvehicle lifestyle, continued weak credit metrics such ashigh leverage and low fixed charge coverage, and the company'srelatively small size. Partially offsetting these risks areMoody's expectation that the company will generate discretionarycash flow that could be used to service debt, Affinity's leadingmarket position in the narrow niche of publications and membershipclubs for recreational vehicles, and the high renewal rate forsubscriptions and service contracts.

The stable outlook reflects Moody's belief that, while motor fuelprices near historical highs will pressure demand growth forproducts and services directed towards RV users, Affinity likelywill generate a small cash flow surplus that could be used toimprove the balance sheet.

Affinity Group Holding, Inc, with headquarters in Ventura,California, produces about three dozen publications largelyfocused on recreational vehicles and operates travel membershipclubs for RV owners. The company is divesting the Camping Worldretail segment. Pro-forma revenue for the 12 months ending March31, 2007 was approximately $211 million.

AIR JAMAICA: Moody's Assigns B1 Rating to Senior Unsecured Notes----------------------------------------------------------------Moody's Investors Service assigned a rating of B1 to Air JamaicaLimited's guaranteed senior unsecured notes. The rating is basedon the unconditional and irrevocable guarantee of the Governmentof Jamaica which has a foreign-currency bond rating of B1.

The Ba3 foreign currency country ceiling for bonds is based on theforeign currency government bond rating of B1 and Moody'sassessment of a medium risk of a payments moratorium in the eventof a government bond default.

The B1 rating assigned to Air Jamaica Limited reflects theapplication of Moody's rating methodology for government-relatedissuers, 'The Application of Joint Default Analysis to government-Related Issuers', published in April 2005. The Baseline CreditAssessment for Air Jamaica Limited is 21 reflecting weakperformance, a history of operating losses and high leverage. Thelikelihood of government support is highbecause of Air Jamaica's status as the national flag carrier andthe existence of approximately $400 million of debt issued by AirJamaica that is guaranteed by the Government. The defaultdependency is high because, while the government has aconstitutional provision that prioritizes the elimination of abudget deficit by mandating debt-service payments as the firstexpenditure policy, if Air Jamaica is unable to make timelypayments of interest and principal the unsecured notes will becomethe obligation of the Government of Jamaica and will be includedas public sector indebtedness which is subject to the provision ofpayment under the Jamaican Constitution.

Although the current rating outlook for the Government of Jamaicais stable, the company must contend with a number of creditchallenges including a high vulnerability to domestic and externalshocks, such as hurricanes or other natural disasters or othercircumstances such as increased airport access costs and feesimposed on passengers which cause a reduction in demand for airtransportation to Jamaica, and which could impact the tourismindustry and Jamaica's economy more broadly.

As a result of poor financial performance with operating lossesbetween 1994 and 2004, the Government of Jamaica acquired fullownership and control of Air Jamaica Holdings, which holds 100% ofthe outstanding common shares of Air Jamaica Limited, the nationalairline of Jamaica on Dec. 23, 2004. In each of the fiscal yearssince being acquired by the Government Air Jamaica's operatinglosses have continued. The Government unconditionally guaranteespayment of principal and interest on the notes which will be soldin privately negotiated transactions which, under Rule 144A, donot require registration under the Securities Act of 1933.

The stable outlook reflects the likelihood that the Governmentwill continue to invest in Air Jamaica despite its continuedgeneration of operating losses. Downward pressure on the ratingcould occur if real gross domestic product fails to exhibitsustainable growth, the tourism industry (Jamaica's leading grossearner of foreign exchange) contracts, or net inflows fromofficial and private sources are inadequate to financethe current account deficit. The ratings could be raised if, inaddition to continued strengthening of the credit metrics of theGovernment of Jamaica, Air Jamaica generates sustained operatingprofits and positive cash from operations, which allow the companyto increase its cash balance.

Assignments:

* Issuer: Air Jamaica Limited

-- Senior Unsecured Regular Bond/Debenture, Assigned B1.

Air Jamaica Limited, headquartered in Kingston, Jamaica, providesservice from Jamaica to the U.S., Toronto, and other Caribbeandestinations.

ALTERNATIVE LOAN: Moody's Rates Class B-1 Certificates at Ba2-------------------------------------------------------------Moody's Investors Service assigned a Aaa rating to the seniorcertificates issued by Alternative Loan Trust 2007-OH1 and ratingsranging from Aa1 to Ba2 to mezzanine and subordinatecertificates in the deal.

The securitization is backed by Option Adjustable-Rate, Alt-Amortgage loans and originated by Countrywide Home Loans, Inc.(50.88%), GreenPoint Mortgage Funding Inc. (20.69%), Quicken LoansInc. (16.03%,) and other originators. The ratings are basedprimarily on the credit quality of the loans, on the protectionfrom subordination, and a swap agreement. Moody's expectscollateral losses to range from 1.10% to 1.30%.

AMC ENTERTAINMENT: Fitch to Rate New $400 Million Loan at CCC-------------------------------------------------------------Fitch has affirmed the Issuer Default Ratings of Marquee HoldingsInc. and its principal operating subsidiary AMC Entertainment,Inc., at 'B' following the company's recent announcement.

Fitch expects to rate the new $400 million senior unsecured termfacility 'CCC/RR6' and would also expect to rate the potential$275 million senior unsecured term loan facility 'CCC/RR6' basedon their deep structural subordination in the capital structure.The Rating Outlook is Stable.

Marquee Holdings has announced an intention to enter into a five-year $400 million senior unsecured term loan facility at anadditional holding company level, named AMC EntertainmentHoldings, Inc., to fund a dividend payout to Marquee's currentshareholders. Neither Marquee or its operating subsidiary AMCEntertainment or its subsidiaries will be a party to thetransaction. Simultaneously, Marquee announced a consentsolicitation to amend the indenture of its existing discount notesdue 2014 to accommodate a dividend payment of up to $275 millionprior to the next accretion date on Aug. 15, 2007. If theamendment is approved, Marquee intends to use cash on hand at AMCEntertainment but also has an option to fund the dividend byentering into an additional $275 million senior unsecured termloan facility. The note holders are offered a 1.44% consent feeat maturity. Regardless of the results of the solicitation,entering into the proposed $400 million facility would trigger acash interest payout on the discount notes estimated atapproximately $29 million per year beginning on Feb. 15, 2008.This announcement follows the suspension of Marquee's IPO onMay 3, 2007.

Fitch believes that AMC/Marquee has sufficient financialflexibility at its current rating to fund the additional debtservice payments due to the recent debt reduction, solid operatingperformance and expectations for a continued strong box officeperformance for the remainder of the summer season. In March2007, the company allocated all proceeds from the NationalCineMedia IPO and $109 million in cash toward debt repayment andfully redeemed approximately $600 million of its higher couponoperating company senior and subordinated notes. Therefore, whilethe proposed transaction will result in higher consolidated debtlevels, potentially reaching the level prior to the debtreduction, Fitch notes that the new debt does not affect thedefault probability and recovery expectations of the operatingcompany debt ranked higher in the capital structure.

Liquidity profile may be weakened if the company chooses to fundthe $275 million additional dividend with cash on hand at AMC,pending the results of the consent solicitation. The companyreported a proforma cash balance of $362 million and $177 ofavailability under its revolving facility as of Dec. 28, 2006.

Following the suspension of the AMC IPO in early May 2007, Fitch'sratings incorporated the potential for another equity offering anda dividend, albeit a lower one, to the shareholders. Therefore,Fitch believes that the announced plan to return capital to thecurrent shareholders is within the existing and expected financialpolicies reflected by the 'B' rating.

Based in Kansas City, Missouri, AMC Entertainment Inc. --http://www.amctheatres.com/-- is a worldwide leader in the theatrical exhibition industry. The company serves more than 250million guests annually through interests in 415 theatres and5,672 screens in 12 countries including the United States, HongKong, Brazil and the United Kingdom.

Moody's also assigned a B3 rating to its proposed debt at AMCEntertainment Holdings, Inc., a newly created entity that willbecome the parent of Marquee. The company intends to use proceedsto fund a dividend to Marquee's current stockholders.

The negative outlook reflects concerns over the increase inleverage to 7.2 times debt-to-EBITDA from 6.7 times (based onestimated results for the year ended March 31, 2007, and as perMoody's standard adjustments, which include operating leases).Furthermore, the transaction creates no value for creditors andrepresents a reversal from the commitment to improving Marquee'scredit profile that management demonstrated by repaying debt withproceeds from the National CineMedia transactions. IfMarquee's debt-to-EBITDA remains in excess of 7 times over thenext year, or if the company does not generate positive free cashflow, Moody's would likely downgrade the corporate family ratingto B2. Conversely, Moody's would consider stabilizing the outlookwith:

(1) leverage below 7 times and on track to fall to the low to mid 6 times; and

(2) positive free cash flow.

The B3 rating on the proposed debt incorporates its junior-mostposition in the capital structure, and the LGD6 93% reflects itslow recovery prospects as a result of the material amount ofclaims ranking senior to it that would have to be repaid first ina default scenario. This new debt does not benefit from anysubsidiary guarantees, nor does it have a security interest in anyassets of the company. It is structurally subordinated to allother debt in the capital structure, which, inclusiveof capitalized operating leases, comprises approximately $5.5billion. The introduction of this junior-ranking claim of size tothe company's consolidated capitalization, however, results in anupgrade of the rating for the higher-ranking (via structuralseniority) senior subordinated notes to B2, from B3, as the LGDestimate is reduced. All other ratings were affirmed. A summaryof rating actions follows, includingupdated LGD assessments and point estimates to reflect the newcapital structure.

The B1 corporate family rating for Marquee continues to reflecthigh leverage, sensitivity to product from movie studios, and aweak industry growth profile, offset by good liquidity and theadvantages of scale and geographic diversity.

Headquartered in Kansas City, Mo., AMC Entertainment Inc. --http://www.amctheatres.com/-- is a theatrical exhibition company with interests in about 382 theatres with 5,340 screens as of Dec.28, 2006. About 87 percent of the company's theatres are locatedin the U.S. and Canada, and 13 percent in Mexico, Argentina,Brazil, Chile, Uruguay, Hong Kong, France, and the U.K.

S&P also assigned a 'CCC+' rating to AMC Entertainment HoldingsInc.'s proposed $400 million senior unsecured pay-in-kind termloan facility due 2012 and a 'CCC+' rating to its 364-day$275 senior unsecured PIK term loan due 2008.

At the same time, S&P affirmed its issue ratings on AMCEntertainment Inc. and its parent company, Marquee Holdings Inc.

The tender offer and the related consent solicitation to amend theindenture, pursuant to the Notes were issued upon the terms andsubject to the conditions set forth in the Offer to Purchase andConsent Solicitation Statement dated May 21, 2007, and the relatedLetter of Transmittal and Consent. The tender offer will expireat midnight, New York City time, on Monday, June 18, 2007 unlessextended by Quest Diagnostics.

The total consideration for the Notes was determined as of2:00 p.m., New York City time, on June 4, 2007, using the bid-sideyield on the 4.625% U.S. Treasury Note due March 31, 2008, asdisplayed on the Bloomberg Government Pricing Monitor Page PX3plus 50 basis points, minus accrued and unpaid interest to, butnot including, the Early Settlement Date. The yield on theReference Security was 5.089% and the tender offer yield was5.589%.

Accordingly, the total consideration for each $1,000 principalamount of Notes validly tendered and not withdrawn at or prior tothe Consent Deadline is $1,088.58. The Total Considerationincludes a consent payment of $30 per $1,000 principal amount ofthe Notes, which will be payable only in respect of the Notespurchased that were validly tendered and not withdrawn on or priorto 5:00 p.m., New York City time, on June 4, 2007.

Holders who tender their Notes after the Consent Deadline and ator prior to the Expiration Time will not be eligible to receivethe consent payment, and accordingly will only be eligible toreceive an amount equal to the Total Consideration less theconsent payment. Holders whose Notes are accepted for paymentwill also be paid accrued and unpaid interest from the most recentinterest payment date to, but not including, the applicableSettlement Date.

For the purposes of calculating the Total Consideration and theTender Offer Consideration pursuant to the terms of the tenderoffer, the Early Settlement Date is June 8, 2007, which is thedate that Quest Diagnostics expects to settle the purchase ofNotes which have been validly tendered and not withdrawn on orprior to the Consent Deadline.

In addition, Quest Diagnostics reported that approximately$348 million of outstanding Notes, or approximately 99.4% of theaggregate principal amount of Notes outstanding, had been validlytendered and not withdrawn at or prior to the Consent Deadline.Accordingly, Quest Diagnostics has received the requisite consentsto adopt the proposed amendments to the Indenture governing theNotes pursuant to the consent solicitation. The amendments to theIndenture contained in such supplemental indenture becomeeffective upon execution of the supplemental indenture but willnot become operative until the date on which all Notes validlytendered prior to the Consent Deadline and not withdrawn at orprior to the Consent Deadline are accepted for purchase on theEarly Settlement Date pursuant to the Offer to Purchase.

For questions concerning the procedures for tendering Notes orrequests for the Offer to Purchase should contact the informationagent and Depositary, Global Bondholder Services Corporation, at(866) 804-2200.

Ameripath Inc. is a national provider of physician-basedpathology, dermatopathology and molecular diagnostic services tophysicians, hospitals, clinical laboratories and surgery centers.A team of sub-specialized pathologists and Ph.D. scientistsprovide medical expertise, diagnostic quality, and personalconsultation services. AmeriPath's team of more than 400 highlytrained, board-certified pathologists provide medical diagnosticsservices in outpatient laboratories owned, operated and managed byAmeripath, as well as in hospitals and ambulatory surgicalcenters.

Specialty Laboratories supports local pathology and community-based medicine by partnering with pathologists and hospitals toimprove patient care and reduce episodes-of-care costs. Specialtyoffers hospitals an extensive menu of highly advanced clinicaltests used by physicians to diagnose, monitor and treat diseaseand a single-source solution for esoteric testing needs.

* * *

As reported in the Troubled Company Reporter on Apr. 18, 2007,Moody's Investors Service placed the ratings of Quest DiagnosticsIncorporated under review for possible downgrade (Baa2 seniorunsecured debt rating). The rating action follows theannouncement that Quest has signed a definitive agreement toacquire AmeriPath in an all cash transaction valued atapproximately $2 billion, including the assumption ofapproximately $770 million in AmeriPath debt (B2 Corporate FamilyRating).

Concurrently, Moody's placed the ratings of AmeriPath under reviewfor possible upgrade. Moody's expects the deal to close by theend of the second quarter of 2007 and is subject to shareholderand regulatory approval.

Mr. Glenn states that it more than a coincidence that TennenbaumCapital Partners, who proposed the plan and is the largest holderof the company's subordinated debt, sold its Ball stock whilestill in negotiations with the company in February 2007. Mr.Glenn contends that the Board seems to have ignored viablealternatives, including a likely sale of the company's assets.Further, the board had announced the pre-packaged plan while atleast one party had signed a confidentiality agreement with thecompany to propose an alternative transaction.

Mr. Glenn also discloses that Jefferies & Company, the company'sfinancial advisor, failed to return numerous calls from LiberationInvestments to discuss options to maximize value for the benefitof all shareholders.

Demands

Mr. Glenn relates that due to the lack of interest in protectionshareholders and several vacancies in the Board, LiberationInvestments wants Manny Pearlman and Gregg Frankel to be appointedas directors.

Liberation Investments also wants access to all of the company'sbooks and records relating to the pre-packaged plan.

Mr. Glenn says that Liberation Investments reserves the right toseek relief pursuant to Section 220 of the Delaware GeneralCorporation Law and Bankruptcy Rule 2004.

Mr. Glenn concludes that although Liberation Investments isprepared to vindicate its rights both in and out of bankruptcycourt, it is also ready, able and willing to negotiate aconsensual resolution of the matter.

About Bally Total Fitness

Based in Chicago, Illinois, Bally Total Fitness Holding Corp.(NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers in the U.S., with over 375 facilitieslocated in 26 states, Mexico, Canada, Korea, China and theCaribbean under the Bally Total Fitness(R), Bally Sports Clubs(R)and Sports Clubs of Canada (R) brands. Bally offers a uniqueplatform for distribution of a wide range of products and servicestargeted to active, fitness-conscious adult consumers.

* * *

As reported in the Troubled Company Reporter on June 4, 2007,Bally Total Fitness reached an agreement in principle on theproposed terms of a consensual restructuring with certain holdersof over 80% in amount of its 9-7/8% Senior Subordinated Notes due2007. The company plans to implement the proposed restructuringthrough a pre-packaged Chapter 11 bankruptcy filing of the parentcompany, Bally Total Fitness Holding Corporation, and certain ofits subsidiaries.

BALLY TOTAL: Wattles Capital Unloads Shares of Common Stock-----------------------------------------------------------Wattles Capital Management, LLC, disclosed in a regulatory filingwith the U.S. Securities and Exchange Commission that on June 4,2007, it sold an aggregate of 956,300 shares of Bally TotalFitness Holding Corp.'s Common Stock. WCM had previously sold 2.5million shares on June 1.

As of June 1, 2007, WCM has ceased to be beneficial owners of morethan 5% of the shares of Bally's Common Stock.

About Bally Total Fitness

Based in Chicago, Illinois, Bally Total Fitness Holding Corp.(NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers in the U.S., with over 375 facilitieslocated in 26 states, Mexico, Canada, Korea, China and theCaribbean under the Bally Total Fitness(R), Bally Sports Clubs(R)and Sports Clubs of Canada (R) brands. Bally offers a uniqueplatform for distribution of a wide range of products and servicestargeted to active, fitness-conscious adult consumers.

* * *

As reported in the Troubled Company Reporter on June 4, 2007,Bally Total Fitness reached an agreement in principle on theproposed terms of a consensual restructuring with certain holdersof over 80% in amount of its 9-7/8% Senior Subordinated Notes due2007. The company plans to implement the proposed restructuringthrough a pre-packaged Chapter 11 bankruptcy filing of the parentcompany, Bally Total Fitness Holding Corporation, and certain ofits subsidiaries.

BALLY TOTAL: Michael Feder Named as Chief Operating Officer-----------------------------------------------------------Bally Total Fitness Holding Corporation disclosed that MichaelFeder has joined the company as Chief Operating Officer and willassume broad leadership responsibilities for all operations.

The company also said that it is continuing its search for apermanent CEO.

Mr. Feder is a Managing Director at AlixPartners, a financialadvisory firm specializing in business performance improvement andcorporate restructuring initiatives. He brings more than 35 yearsof senior operating experience to Bally Total Fitness, includingan extensive background in transitional management and performanceimprovement services. Additionally, he has served in a variety ofadvisory and interim leadership roles at other corporations, wherehe has demonstrated his capabilities in liquidity generation andcash management, executing effective cost reduction initiatives,and developing new business models in response to evolvingmarkets.

Bally Interim Chairman and Chief Restructuring Officer Don R.Kornstein commented, "We are excited that Michael has decided tojoin our team as we navigate through our operational and financialrestructuring. He brings broad leadership skills and experiencein successfully managing turnarounds to his new role at Bally, andwill play a key leadership role as we move to become operationallystronger as a company. Michael will have the additional supportof his team at AlixPartners, which will be working closely withour field organization to implement the adjustments necessary tosuccessfully restructure Bally Total Fitness."

John Wildman has been with Bally Total Fitness for over 27 years,and most recently served as the Company's Chief Operating Officer.He replaces Jim McDonald as interim CMO, and will continue tooversee the sales organization as Senior Vice President, Sales.The integration of sales, marketing and back office collections isbeing implemented to improve the Company's overall results.

Don R. Kornstein added, "John brings a depth of institutionalknowledge about the Company that will prove invaluable to ourstrategy of reshaping Bally Total Fitness for future profitablegrowth. His energy and enthusiasm have positively affected ourfield teams and thereby shaped their interaction with our members.Our brand remains well recognized as a leader in the fitnesssector, and John's hard work and dedication will continue to be adriving force behind our success in strengthening the brandconsistent with our improved operations."

Mr. Feder currently serves as an advisor to Calpine Corporation.His role at Calpine is being transitioned to several team membersthat have been working with him at the company. Prior to that, heserved in a variety of interim management roles at companiesincluding InteliStaf, a privately held company in the nurse-staffing industry, Avado Brands, Inc., a $300 million casualdining restaurant operator, and DIRECTV - Latin America, a leadingpan-regional provider of direct-to-home satellite televisionentertainment to Latin America.

About Bally Total Fitness

Based in Chicago, Illinois, Bally Total Fitness Holding Corp.(NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers in the U.S., with over 375 facilitieslocated in 26 states, Mexico, Canada, Korea, China and theCaribbean under the Bally Total Fitness(R), Bally Sports Clubs(R)and Sports Clubs of Canada (R) brands. Bally offers a uniqueplatform for distribution of a wide range of products and servicestargeted to active, fitness-conscious adult consumers.

* * *

As reported in the Troubled Company Reporter on June 4, 2007,Bally Total Fitness reached an agreement in principle on theproposed terms of a consensual restructuring with certain holdersof over 80% in amount of its 9-7/8% Senior Subordinated Notes due2007. The company plans to implement the proposed restructuringthrough a pre-packaged Chapter 11 bankruptcy filing of the parentcompany, Bally Total Fitness Holding Corporation, and certain ofits subsidiaries.

The upgrades reflect the full defeasance of the 1328 Broadwayloan, which has a current whole-loan balance of $130.9 million.The whole loan was participated into a pooled senior componentwith a trust balance of $95.8 million and an unpooled subordinatedcomponent totaling $35.1 million. The subordinate note is thesole source of cash flow for the upgraded classes.

This rating action concludes the review for possible downgradeinitiated on May 30, 2007 following the announcement that BerryPlastics Group, Inc. (Parent Company of Berry) was issuing a $500million term loan. The proceeds will be used to fund a one timedividend. Additional instrument rating actions are:

(1) the erosion in credit metrics to a level more indicative of a B3 rating;

(2) Moody's belief that the credit metrics will not return to a level more consistent with the B2 rating category until 2010; and

(3) the decline in enterprise value and collateral coverage stemming from the additional interest payments.

Berry's rating upon the consummation of the merger with Covalencereflected an expected reduction in debt in the intermediate termto a level more consistent with the B2 rating category. Theissuance of additional debt weakens leverage and coverage to alevel that is indicative of a B3 rating. Moreover, the forecastedfree cash flow over the intermediateterm is insufficient to improve these metrics to a level moreconsistent with the B2 rating category. The expected additionalinterest payment for the new term loan represents a substantialproportion of the projected cash from operations and a significantdrag on free cash flow.

The integration of Covalence is not yet complete and risks stillremain because of the difference in product lines and size as wellas the historical operating issues. Additionally, the mergersynergies represent a substantial portion of the forecastedfinancial results and are not yet assured given the continuingintegration risk.

As stated in our credit opinion dated April 11, 2007, a failure toreduce leverage below 6.5 times in the intermediate term couldresult in a downgrade. Berry has substantially increased debttwice in the last nine months and the ratings assigned both timeswere based upon the company's promise to reduce debt over theintermediate term.

The current ratings and outlook are predicated upon significantdebt reduction over the intermediate term. There is little room inthe rating class for negative variance in operating results or anydeterioration in credit metrics.

The Caa2 rating on the $500 million senior unsecured term loan istwo notches below the Corporate Family Rating. The issuer is theBerry Plastics Group, Inc. which is the parent holding company ofBerry Plastics Holdings Corporation and the issue is notguaranteed by any subsidiaries. The rating reflects the deepstructural subordination to a significant amount of both securedand guaranteed debt at the operating holding company, BerryPlastics Holdings Corporation. The rating also reflects aloss given default of 93% and an expected loss of 25% and theabsence of coverage on an enterprise value or distressed basis.Interest is payable in cash, PIK or a combination of 50% of each.Covenants include limitations on the incurrence of debt liens,asset sales, mergers, restricted payments, and future loanguarantees.

Based in Evansville, Indiana, Berry Plastics Corporation --http://www.berryplastics.com/-- manufactures and markets rigid plastic packaging products. Berry Plastics provides a widerange of rigid open top and rigid closed top packaging as wellas comprehensive packaging solutions to over 12,000 customers,ranging from large multinational corporations to small localbusinesses. The company has 25 manufacturing facilitiesworldwide, including in Italy, England and Hong Kong and morethan 6,800 employees. Pro forma for the recent merger withCovalence Specialty Materials Corporation, net sales for the 12months ended March 31, 2007 amounted to approximately $3.0billion.

CMS ENERGY: Moody's Upgrades Rating to Ba1 on Sr. Unsec. Notes--------------------------------------------------------------Moody's Investors Service upgraded the long-term ratings of CMSEnergy Corporation (CMS: senior unsecured to Ba1 from Ba3) and itssubsidiary Consumers Energy Company (Consumers: seniorsecured to Baa1 from Baa2), and revised the outlook of bothcompanies to stable from positive.

The Corporate Family Rating, Probability of Default Rating andSpeculative Grade Liquidity rating for CMS have been withdrawn.All loss given default assessments, have also been withdrawn.

Moody's also assigned a rating of Baa1 to Consumers' $500 millionamended and restated secured credit facility terminating in 2012,and a rating of Baa3 to CMS' $300 million amended and restatedsecured credit facility terminating in 2012.

"The upgrades reflect significant improvement in CMS' business andfinancial risk profile as a result of its recent completion of thesales of its international businesses, its renewed focus onMichigan utility operations, and its implementation of asignificant deleveraging strategy" said Laura Schumacher, VicePresident Senior Analyst.

CMS has now successfully completed the sale of its businesses inthe Middle East, Africa, India, Argentina and Venezuela as well asthe sale of certain northern Michigan gas assets. The company hasalso entered into agreements to sell its remaining non-U.S. basedbusinesses in Brazil, Chile and Jamaica. Year-to-date in 2007, CMShas received sales proceeds of approximately $1.2 billion, andanticipates an additional $300 million from the announcedagreements by year end. Proceeds are beingused primarily for utility investment and debt repayment at theparent company. CMS has infused $400 million of equity intoConsumers, and will have repaid approximately $650 million ofconsolidated debt by year-end.

The upgrade of Consumers reflects the reduction in CMS' overallconsolidated business risk and its publicly stated intent toconcentrate on regulated utility operations in Michigan. Theupgrade also reflects improvement in Consumers' financial andoperating risk profile resulting from the sale of the MidlandCogeneration Venture in 2006 as well as its sale of the Palisadesnuclear facility in 2007. The upgrade considers the significantcapital expenditure program planned at the utility,including its planned purchase of the Zeeland gas-fired powerplant, and assumes the company will be reasonably successful inmanaging its regulatory relationship with an objective ofattaining timely recovery of increased expenditures and anopportunity to earn a fair return.

The upgrades for both CMS and Consumers reflect Moody'sexpectation of improved financial performance as a result of debtreduction and reduced cash flow volatility. Over the near-to-medium term, Moody's expects the ratio of cash flow fromoperations excluding changes in working capital (CFO x WC) to debt(calculated in accordance with Moody's standard analyticaladjustments) at CMS to move into the mid-teens as this samemetric at Consumers moves into the high-teens.

The stable outlooks reflect our expectation of relatively stablecash flows generated by CMS' regulated operations, our assumptionthat the company will be successful in managing its regulatoryrelationships, that it will continue with its debt reductionprogram as scheduled and that it will maintain a disciplinedapproach to its recently re-establisheddividend policy.

Based in Jackson, Michigan, CMS Energy Corporation is adiversified energy holding company. Through its regulated utilitysubsidiary, Consumers Energy Company, the company provides naturalgas and electricity to almost 6.5 million of the nearly 10 millionresidents in all 68 of Michigan's Lower Peninsula counties.

COMMERCIAL MONEY: Netbank Can't Assert Claims Against Royal Bonds-----------------------------------------------------------------The U.S. Bankruptcy Court for the Southern District of Californiahas issued a ruling against NetBank FSB in Commercial MoneyCenter, Inc.'s Chapter 7 liquidation proceeding.

Pursuant to the Court's ruling, NetBank FSB, a subsidiary ofNetBank, Inc., is ordered not to assert claims against RoyalIndemnity Company's bonds. The Court held that NetBank hadneither an ownership interest nor a security interest in the CMClease payments at issue.

The litigation arose from a program in which surety bonds wereissued in the names of Royal Indemnity and other surety companies,securing the payment of equipment leases issued by CMC, a now-defunct leasing company.

NetBank's claims against Royal Indemnity are pending in federalcourt in Cleveland.

About Commercial Money Center

Commercial Money Center, Inc., filed for chapter 11 protection onMay 30, 2002 in the U.S. Bankruptcy Court for the SouthernDistrict of Florida. The company's case was converted into achapter 7 liquidation proceeding on June 28, 2002. The FloridaBankruptcy Court ordered that all collections by the servicers andsub-servicers under the leases be paid in escrow to the bankruptcytrustee pending final resolution of rights to those collections.

On Sept. 18, 2002, the Florida Court transferred the Debtor'schapter 11 case to the U.S. Bankruptcy Court for the SouthernDistrict of California (Case No. 02-09721). John W. Cutchin, Esq.represents the Debtor in its liquidation proceeding. Richard M.Kipperman has been appointed as Chapter 7 liquidation trustee inthe Debtor's bankruptcy case.

CORD BLOOD: March 31 Balance Sheet Upside-Down by $4.7 Million--------------------------------------------------------------Cord Blood America Inc. reported a net loss of $1,315,775 onrevenue of $1,698,003 for the first quarter ended March 31, 2007,compared with a net loss of $1,711,479 on revenue of $551,060 forthe same period ended March 31, 2006.

Rainmakers International's revenues increased $517,186 as a resultof additional marketing and exposure for the company's radio andtelevision advertising services, which resulted in the addition tothe company's customer base and increased revenue from existingcustomers. Cord's revenues, which includes the company'sumbilical cord stem cell preservation operations, increased$629,757 or 242% to $890,150.

Cost of services increased by $573,536 as a result ofsubstantially higher revenues, but gross profit increased from 5%to 35% as economies of scale, especially for the company's Corddivision, start impacting the company's results.

At March 31, 2007, the company's balance sheet showed $6,641,969in total assets and $11,186,452 in total liabilities, resulting ina $4,724,483 total stockholders' deficit.

The company's balance sheet at March 31, 2007, also showedstrained liquidity with $1,272,460 in total current assetsavailable to pay $11,184,506 in total current liabilities.

Rose, Snyder & Jacobs, in Encino, California, expressedsubstantial doubt about Cord Blood America Inc.'s ability tocontinue as a going concern after auditing the company's balancesheet for the years ended Dec. 31, 2006, and 2005. The auditingfirm pointed to the company's recurring operating losses,continuing use of cash in operating activities, insufficientworking capital and accumulated deficit at Dec. 31, 2006.

About Cord America

Headquartered in West Hollywood, California, Cord Blood AmericaInc. (OTCBB: CBAI) -- http://www.cordblood-america.com/-- is the parent company of Cord Partners, which facilitates umbilical cordblood stem cell preservation for expectant parents and theirchildren. Collected through a safe and non-invasive process, cordblood stem cells offer a powerful and potentially life-savingresource for treating a growing number of ailments, includingcancer, leukemia, blood, and immune disorders.

The company, through its subsidiary Career Channel Inc., d/b/aRainmakers International, also provides television, radio andinternet advertising services to businesses that sell family basedproducts and services.

CUSTOM FOOD: Committee Wants Storch Amini as Special Counsel------------------------------------------------------------The Official Committee of Unsecured Creditors of Custom FoodProducts Inc. asks the U.S. Bankruptcy Court for the District ofDelaware for authority to retain Storch Amini & Munves PC as itsas special counsel, nunc pro tunc, as of May 18, 2007.

Storch Amini will:

a. investigate the financial and other business affairs of the Debtor;

b. investigate any actions taken by the Debtor's board of directors, senior management or lenders which in Storch Amini's professional judgment could lead to a recovery for the Debtor's estate or the Debtor's unsecured creditors;

c. investigate any potential causes of action that may arise under the Debtor's director's and officer's insurance policy; and

d. file and prosecute any viable claims arising out of the above.

The Committee proposes to retain Storch Amini, subject to Courtapproval, on a contingency fee basis. Before a complaint is filedor adversary proceeding initiated, a contingency fee of 15% of anyrecovery will become due and owing to Storch Amini upon anysettlement. After a complaint is filed or an adversary proceedinginitiated, a contingency fee of one-third or about 33.3% of anyrecovery will become due and owing to Storch Amini upon anysettlement or judgment in any case that is filed by Storch Amini.The contingency fee is to be paid solely from the proceeds of anysettlement or judgment.

In the event of a structured settlement or payments made overtime, Storch Amini will be entitled to take their fee based on apresent value calculation. In the event of a settlement involvingnon-cash compensation, or any further undertaking by Storch Aminithat is not in the nature of filing any claims but neverthelessbenefits the estate or unsecured creditors, and whose monetaryvalue is not readily ascertainable, compensation will bedetermined by the Court commensurate with the results achieved andthe risk assumed by counsel.

In the Committee's opinion, employing Storch Amini is in the bestinterests of the Debtor's estate and creditors.

CWABS ASSET: Moody's Rates Classes BV & BF Certificates at Ba1--------------------------------------------------------------Moody's Investors Service assigned a Aaa rating to the seniorcertificates issued by CWABS Asset-Backed Certificates Trust 2007-8 and ratings ranging from Aa1 to Ba1 to the subordinatecertificates in the deal.

The securitization is backed primarily by fixed rate andadjustable rate, first lien subprime mortgage loans. The loanswere originated by Countrywide Home Loans, Inc. and acquired byCountrywide Financial Corporation. The ratings are basedprimarily on the credit quality of the loans and on protectionagainst credit losses from the lender paid mortgage insurancepolicies provided Mortgage Guaranty Insurance Corporation.The ratings also benefit from subordination, an interest rate swapagreement, excess interest and overcollateralization. Moody'sexpects collateral losses to range from 3.75% to 4.25%.

DUNE ENERGY: Completes Sale of 36000 Shares to Jefferies for $36MM------------------------------------------------------------------Dune Energy, Inc., on June 5, 2007, completed the sale of anadditional 36,000 shares of their 10% Senior RedeemableConvertible Preferred Stock to Jefferies & Company, Inc. for anaggregate purchase price of $36 million pursuant to that optionpreviously granted to the Initial Purchaser under that certainpurchase agreement, dated May 1, 2007, between the company and theInitial Purchaser.

The rights, preferences, powers, limitations and other terms ofthe Additional Shares are set forth in that Certificate ofDesignations filed by the company with the Secretary of State ofthe State of Delaware on May 15, 2007.

The Additional Shares are subject to that Preferred StockRegistration Rights Agreement, dated May 15, 2007, previouslyexecuted by the company whereby we agreed to have filed anddeclared effective a registration statement covering the PreferredStock and the shares of the company's common stock issuable uponconversion of the Preferred Stock. Failure by the company timelyto file and/or have declared effective such registration statementwill result in the imposition of certain penalties, in either cashor additional shares of the company's common stock.

The Additional Shares were not registered under state or federalsecurities laws at the closing and were offered and sold by thecompany to the Initial Purchaser pursuant to an exemption from theregistration requirements of the Securities Act of 1933, asamended provided by Section 4(2) of the Act.

About Dune Energy

Headquartered in Houston, Texas, Dune Energy Inc. (Amex: DNE) --http://www.duneenergy.com/-- is an independent exploration and development company, with operations focused along theLouisiana/Texas Gulf Coast and the North Texas Fort Worth BasinBarnett Shale. Dune will continue to exploit its existing assetbase, seek accretive acquisitions, and enter into additional jointventure drilling programs.

* * *

As reported in the Troubled Company Reporter on May 2, 2007,Moody's Investors Service assigned first-time ratings to DuneEnergy Inc., including a Caa2 Corporate Family Rating, Caa2Probability of Default Rating, and a Caa2 rating (LGD 4, 50%) onits proposed $285 million of senior secured notes due 2012.

DVI MEDICAL: Fitch Holds Junk Ratings on Seven Note Classes-----------------------------------------------------------Fitch Ratings has taken these actions on the long-term andDistressedRecovery ratings for the DVI transactions:

DVI Receivables VIII LLC, Series 1999-1

-- Class C, D, and E notes, currently rated 'C/DR6', are withdrawn.

DVI Receivables XI LLC, Series 2000-1

-- Class A-4 notes remain at 'CC' and DR lowered to 'DR3' from 'DR2';

-- Class B, C, D and E notes remain at 'C/DR6'.

DVI Receivables XVI LLC, Series 2001-2

-- Class A-3 and A-4 notes remain at 'CC' and DR lowered to 'DR3' from 'DR2';

-- Class B, C, D, and E notes remain at 'C/DR6'.

DVI Receivables XIX LLC, Series 2003-1

-- Class A-3a and A-3b notes remain at 'CCC' and DR lowered to 'DR3' from 'DR2';

Fitch's actions are based on continued loan performancedeterioration as reflected in the servicer reports for the periodended April 30, 2007. Since last review on April 5, 2007, Fitchnoted increasing delinquency levels in eight of the transactions,as well as an increasing accumulation of interest shortfalls infive of the transactions. Using assumptions consistent withhistorical DVI securitization performance, Fitch ran a series ofcash flow runs for each transaction to determine the appropriaterating movements, if any.

Fitch has had discussions with U.S. Bancorp Portfolio Services,which replaced DVI, Inc., as servicer for each of thesecuritizations under the terms of each transaction's Contributionand Servicing Agreements in February 2004. Since taking overservicing duties, USBPS has been successful in working out andrealizing recoveries on previously defaulted contracts.

Fitch will continue to closely monitor performance of thetransactions, will have regular contact with USBPS, and may raise,lower or withdraw ratings as appropriate.

EDDIE BAUER: ISS Urges Shareholders to Approve Directors' Election------------------------------------------------------------------Institutional Shareholders Services has changed its previousrecommendation and is now advising its clients to approve theelection of all nine members of Eddie Bauer Holdings, Inc.'s Boardof Directors for one year terms and to ratify the appointment ofthe company's independent registered accounting firm.

On June 6, 2007, the company sent a letter to ISS clarifying thenature of the tax fees paid by the company to its independentregistered public accounting firm in 2006. In its recommendationdated June 7, 2007, ISS concluded, "Previously, ISS did notsupport the ratification of the company's auditors because otherfees, given the disclosure available, represented more than 50% oftotal fees. Given the new disclosure, we are changing our voterecommendation to support the ratification of BDO Seidman as thecompany's auditors for the current fiscal year. For similarreasons, ISS is changing its WITHHOLD vote recommendation of theAudit Committee members, and recommend a vote FOR independentoutsiders John C. Brouillard, Laurie M. Shahon, and Kenneth M.Reiss."

About Eddie Bauer

Based in Redmond, Washington, Eddie Bauer Holdings Inc.(NASDAQ: EBHI) -- http://www.eddiebauer.com/-- is a specialty retailer that sells casual sportswear and accessories for the"modern outdoor lifestyle." Established in 1920 in Seattle, EddieBauer products are available at about 380 stores throughout theU.S. and Canada, through catalog sales and online athttp://www.eddiebaueroutlet.com/. The company also participates in joint venture partnerships in Japan and Germany and haslicensing agreements across a variety of product categories.Eddie Bauer employs 10,000 part-time and full-time associates inthe U.S. and Canada.

* * *

As reported in the Troubled Company Reporter on March 26, 2007,Standard & Poor's Rating Services lowered the ratings on EddieBauer Holdings Inc., to 'B-' from 'B'.

At the same time, Standard & Poor's removed the rating fromCreditWatch with negative implications, where it was placed onNov. 13, 2006. The outlook is negative.

ENERGY PARTNERS: Retains Jones Walker to Conduct Investigation--------------------------------------------------------------Energy Partners, Ltd., disclosed that on June 8, 2007, it retainedthe law firm of Jones, Walker, Waechter, Poitevent, Carrere &Denegre, L.L.P. to conduct an independent investigation intopossible environmental violations at the company's East Bay fieldarising out of on-site governmental agency inspections conductedin the field in late 2005 and early 2006.

Earlier last week, the company met with representatives of theU.S. Attorney for the Eastern District of Louisiana in NewOrleans, the U.S. Environmental Protection Agency and the U.S.Coast Guard and was informed that they are conducting aninvestigation into possible criminal violations arising out ofthose on-site inspections.

The company intends to cooperate fully with the government'sinvestigation and said that operations in the field remainunaffected by the investigation.

About Energy Partners Ltd.

Founded in 1998, EPL is an independent oil and natural gasexploration and production company based in New Orleans,Louisiana. The Company's operations are focused along the U. S.Gulf Coast, both onshore in south Louisiana and offshore in theGulf of Mexico.

* * *

As reported in the Troubled Company Reporter on March 14, 2007,Moody's Investors Service downgraded Energy Partners Ltd.'sCorporate Family Rating to B3 from B2 and its Probability ofDefault Rating to B3 from B2 following the conclusion of thecompany's strategic alternative process.

ESSAR GLOBAL: Gets Investment Canada Act Approval on Acquisition----------------------------------------------------------------Essar Global Limited has obtained, through its wholly ownedsubsidiary Essar Steel Holdings Limited, approval under theInvestment Canada Act in connection with its proposed acquisitionof all of the outstanding common shares of Algoma Steel Inc.

Essar has now received all regulatory approvals necessary tocomplete the arrangement. The arrangement will still need theapproval of a Canadian court.

Essar Global Chairman, Shashi Ruia, said, "I am delighted with theMinister's approval... The acquisition of Algoma will prove to beof enormous benefit to both Essar and Algoma, as well as the Cityof Sault Ste. Marie, the province of Ontario and Canada as awhole."

"In Essar," Mr. Ruia added, "Algoma will have new ownershipcommitted to investing in Algoma's facilities to support itsgrowth and sustainability. We look forward to completing thearrangement, and welcoming Algoma into the Essar family."

Mr. Denis Turcotte, who will continue as Chief Executive Officerof Algoma, also welcomed the news. According to Mr. Turcotte,"Essar's acquisition of Algoma will enable us to manage new growthopportunities and migration of the best technological andengineering practices in both organizations. I am confident thatthis is a win-win situation for all Algoma stakeholders, includingAlgoma employees but also the local community of Sault Ste. Marieand the province of Ontario."

In order to obtain the Minister's approval under the InvestmentCanada Act, Essar has provided to the Minister a number ofimportant commitments in respect of Algoma's management,operations, employees and community contributions. The attachedBackgrounder outlines a number of the key commitments.

About Algoma Steel

Algoma Steel Inc. -- http://www.algoma.com/-- is an integrated steel producer based in Sault Ste. Marie, Ontario with steelshipments of 2.4 million tons in 2006. Revenues, which totalledCDN$1.9 billion in 2006, are derived primarily from themanufacture and sale of rolled steel products including hot andcold rolled steel and plate.

About Essar Global

Essar Global Ltd. -- http://www.essarglobal.com/-- is an international conglomerate operating in six business areas -steel, oil & gas, power, communications, shipping & logistics andconstruction. It has offices world-wide and employs approximately20,000 people, including over 3500 persons in the United States.The group has built a portfolio of assets with expected revenuesof $10 billion in the year to March 2008. It owns Essar SteelHoldings Limited, India's largest exporter of flat steel.

The upgrades are driven primarily by the stable credit quality ofthe portfolio, the seasoning of the collateral and deleveraging ofthe capital structure. The Fitch has improved and remains in the'BBB/BBB-' category. According to the most recent trustee report,dated May 18, 2007, all overcollateralization and interestcoverage ratios have improved and continue to pass theircovenants. The underlying portfolio includes one defaulted assetrepresenting 2% of the $292.9 million of total collateral andthere are no other assets rated below 'B+'.

All of the CMBS assets in the portfolio were issued prior to 2003.The highest single vintage concentration is 1998 (15.3%). Due todefeasance and amortization, Fitch believes that the vintage ofthe underlying CMBS collateral is a positive factor in thistransaction.

The rating of the class A-1MM and A-2 notes addresses thelikelihood that investors will receive full and timely payments ofinterest, as per the governing documents, as well as the statedbalance of principal by the legal final maturity date. Inaddition, the class A-1MM note short term rating addresses thenoteholders' ability to put the notes back to the put provider onits next applicable remarketing date, which will be no later thansix months from its prior remarketing date. The rating on theclass B and C notes addresses the ultimate payment of interestand principal. The rating of the class D notes addresses thelikelihood that investors will receive their stated balance ofprincipal by the legal final maturity date. The class D noteshave received approximately $6,614,747 of the initial $10,200,000balance since closing.

At the same time, S&P assigned a 'B+' (the same as the corporatecredit rating on the company) issue rating and a '4' recoveryrating to Gregg's proposed $100 million senior secured term loanB, due 2013. The '4' recovery rating indicates the expectationfor average (30%-50%) recovery of principal in the event ofpayment default. The outlook is stable.

Pro forma for its refinancing, Indianapolis, Indiana-based Greggis expected to have about $100 million of debt outstanding.

"The ratings upgrade reflects the considerable deleveraging thecompany has been able to achieve," said Standard & Poor's creditanalyst John Thieroff, "and the prospect that the current capitalstructure is sustainable." A positive outlook is possible in thenext six to 12 months if positive operating trends anddeleveraging continue.

HEALTH MANAGEMENT: Inks Pact to Sell Two Hospitals to Wellmont--------------------------------------------------------------Health Management Associates, Inc., said that it has signed adefinitive agreement to sell two acute care hospitals to WellmontHealth System.

This transaction is expected to be completed on or before August1, 2007, and is subject to various regulatory approvals.

HMA expects to use the proceeds of the sale for general corporatepurposes, which includes debt repayment.

The hospitals are:

* Lee Regional Medical Center, Pennington Gap, Virginia - 80 beds

* Mountain View Regional Medical Center, Norton, Virginia - 133 beds

Under the agreement, Wellmont Health System has committed to offeremployment to substantially all current employees who are in goodstanding at both hospitals.

About Health Management Associates

Health Management Associates Inc. (NYSE: HMA) --http://www.hma-corp.com/-- owns and operates general acute care hospitals in non-urban communities located throughout the UnitedStates. Upon completion of the pending transaction to sell the125-bed Southwest Regional Medical Center, the 103-bed SummitMedical Center, and the 76-bed Williamson Memorial Hospital, HMAwill operate 57 hospitals in 14 states with about 8,300 licensedbeds.

On March 19, 2007, contract drilling and liftboat service providerHercules announced that it had agreed to acquire TODCO in a cashand stock deal for $2.3 billion. Following the acquisition,Hercules would possess the fourth-largest jackup fleet as well asmarket leadership in the liftboat and barge drilling sectors. Itis financing the total transaction with approximately $260 millioncash, $1.5 billion of equity, and $900 million of debt.

Pro forma for the transaction, the combined entity will haveapproximately $920 million in debt, adjusted for operating leases.

The new credit facilities represent one part of Hilite's proposedcapital restructuring. Proceeds from the credit facilities willbe used to refinance $145.2 million of existing debt andrepurchase $39.5 million of third-party PIK preferred stock. Proforma debt outstanding at close of the transaction, expected forJune 30, will total about $220 million.

Investors should be aware that the certificates have not yet beenissued. Upon issuance of the certificates and upon conclusivereview of all documents and information about the transaction, aswell as any subsequent changes in information, Moody's willendeavor to assign definitive ratings, which may differ from theprovisional ratings.

ION MEDIA: Commences Exchange Offer for 13-1/4% & 9-3/4% Stock--------------------------------------------------------------ION Media Networks Inc. has commenced an exchange offer for anyand all of its outstanding 13-1/4% Cumulative Junior ExchangeablePreferred Stock and any and all of its outstanding 9-3/4% Series AConvertible Preferred Stock, as part of its recapitalization.

The company is offering, in exchange for the outstanding shares ofSenior Preferred Stock, newly-issued 11% Series A MandatorilyConvertible Senior Subordinated Notes due 2013 and, depending uponparticipation levels in the Exchange Offer, either newly-issued12% Series A-1 Mandatorily Convertible Preferred Stock or 12%Series B Mandatorily Convertible Preferred Stock.

As part of the Exchange Offer, the company is also solicitingconsents from holders of each series of Senior Preferred Stock to:

(A) amend the applicable certificate of designation governing such series of Senior Preferred Stock to eliminate:

a) all voting rights, other than voting rights required by law;

b) its obligation to repurchase the Senior Preferred Stock upon a change of control;

c) all redemption rights;

d) in the case of the 14¬% Preferred Stock, all exchange rights; and substantially all of the restrictive covenants applicable to such series of Senior Preferred Stock, and

(B) approve the issuance of preferred stock, including the Series A-1 Convertible Preferred Stock, which would rank senior to any unexchanged Senior Preferred Stock.

In the Exchange Offer, tendering holders will receive:

-- For each tendered share of 14¬% Preferred Stock, $7,000 principal amount of Series A Notes and $1,000 initial liquidation preference of the Series A-1 Convertible Preferred Stock, which would rank senior to any unexchanged Senior Preferred Stock; and

-- For each tendered share of 9_% Preferred Stock, $4,000 principal amount of Series A Notes and $1,000 initial liquidation preference of Series A-1 Convertible Preferred Stock.

However, if holders of 50% or less of either series of SeniorPreferred Stock tender in the Exchange Offer and, as a result, thecompany does not receive the requisite approvals of the ProposedAmendments and Senior Issuance from both series of SeniorPreferred Stock in the Consent Solicitation, then tenderingholders will receive:

-- For each tendered share of 14¬% Preferred Stock, $7,500 principal amount of Series A Notes and $500 initial liquidation preference of Series B Convertible Preferred Stock, which would rank junior to any unexchanged Senior Preferred Stock; and

-- For each tendered share of 9_% Preferred Stock, $4,500 principal amount of Series A Notes and $500 initial liquidation preference of Series B Convertible Preferred Stock.

Holders must tender all shares of 14-1/4% Preferred Stock and9-3/4% Preferred Stock that they own and deliver the relatedconsents in the Consent Solicitation to participate in theExchange Offer.

The Exchange Offer and Consent Solicitation will expire at 12:01A.M., New York City time, on July 10, 2007, unless extended orterminated.

More information about the Exchange Offer and Consent Solicitationand related transactions is detailed in an Offer to Exchange andLetter of Transmittal and Consent. Stockholders may obtain a freecopy of these documents by contacting D.F. King & Co. Inc., theinformation agent for the Exchange Offer, at (800) 431-9643.

The securities to be offered have not been, and will not be,registered under the Securities Act of 1933, as amended, and maynot be offered or sold in the United States absent registration oran applicable exemption from the registration requirements of theSecurities Act and applicable state securities laws. The companyis relying on Section 3(a)(9) of the Securities Act to exempt theexchange offer from the registration requirements of theSecurities Act.

About ION Media Networks

ION Media Networks Inc. (AMEX: ION) -- http://www.ionmedia.tv/-- owns and operates a broadcast television station group and IONTelevision, reaching over 90 million U.S. television householdsvia its nationwide broadcast television, cable and satellitedistribution systems. ION Television currently features populartelevision series and movies from the award-winning libraries ofWarner Bros., Sony Pictures Television, CBS Television and NBCUniversal. In addition, the network has partnered with RHIEntertainment, which owns over 4,000 hours of acclaimed televisioncontent, to provide high-quality primetime programming beginningJuly 2007. Utilizing its digital multicasting capability, IONMedia Networks has launched several new digital TV brands,including qubo, a television and multimedia network for childrenformed in partnership with Scholastic, Corus Entertainment,Classic Media and NBC Universal, as well as ION Life, a televisionand multimedia network dedicated to health and wellness forconsumers and families.

* * *

As reported in the Troubled Company Reporter on May 9, 2007,Standard & Poor's Ratings Services placed its ratings on Ion MediaNetworks Inc., including the 'CCC+' corporate credit rating, onCreditWatch with developing implications. The CreditWatchplacement follows TV broadcaster Ion's announcement that itentered into an agreement with Citadel Investment Group LLC andNBC Universal Inc. for a comprehensive recapitalization of Ion.

Investors should be aware that the certificates have not yet beenissued. Upon issuance of the certificates and upon conclusivereview of all documents and information about the transaction, aswell as any subsequent changes in information, Moody's willendeavor to assign definitive ratings, which may differ from theprovisional ratings.

KIRKLAND KNIGHTSBRIDGE: Unsecured Creditors to Recover 100%-----------------------------------------------------------Kirkland Knightsbridge LLC and its debtor-affiliate, KirklandCattle Company, filed with the United States Bankruptcy Court forthe Northern District of California their Joint Chapter 11 Plan ofReorganization.

Treatment of Claims

Under the Plan, Administrative and Priority Tax Claims will bepaid in cash in full.

Madison Capital's Secured Claims

Madison Capital's claim will be deemed allowed in full against theDebtors in an amount equal to its compromise claim. As of theeffective date, Madison Capital Comprise Claim represents a fullsettlement and release of all disputes between the Debtors andMadison Capital.

Other Secured Claims

The Debtors disclose that these entities hold secured claimsagainst the estates:

* General Electric Capital Corporation's claim is secured by a lien on certain wine barrels and related equipment owned by Kirkland Knightsbridge;

* Wells Fargo Home Mortgage's claim is secured by a first deed of trust on a single family dwelling owned by Kirkland Cattle located at 936 Augusta Circle in Napa, California;

* Countryside Home Loans' claim secured by a first deed of trust on a single family dwelling owned by Kirkland Cattle located at 3223 vonUhlit Ranch Road in Napa, California;

Under the Plan, any defaults on these claims will be cured by theeffective date.

The County of Napa's secured claim will be paid in cash in full

Unsecured Claims

General Unsecured Claims against Kirkland Knightsbridge andKirkland Cattle will be paid in cash in full with interest at thelegal rate on or after the effective date.

Prepetition Claims

Prepetition Claims of Kirkland Cattle against KirklandKnightsbridge will be paid in full with interest at 10% perannum from available Cash. Under the Plan, as a condition ofconfirmation, Kirkland Cattle's claim against Knightsbridge willbe deemed subordinated to the full payment of these claims:

John H. MacConaghy, Esq. at MacConaghy and Barnier, PLC representsthe Debtors in their restructuring efforts. No Official Committeeof Unsecured Creditors has been appointed in the Debtors' cases.When the Debtors sought protection from their creditors, theylisted assets and debts between $10 million to $100 million.

At the same time, S&P assigned a bank loan rating of 'B+', onenotch above the corporate credit rating, and a recovery rating of'2', to Koosharem's $300 million first-lien bank loan facilities,indicating its expectation of substantial (70%-90%) recovery ofprincipal in the event of a payment default.

The first-lien facilities consist of a $50 million revolvingcredit facility due 2012 and a $250 million term loan B due 2014.

Standard & Poor's also assigned a bank loan rating of 'CCC+', twonotches below the corporate credit rating, and a recovery ratingof '6', to the company's $100 million second-lien term loan B due2014, indicating our expectation of negligible (0%-10%) recoveryof principal in the event of a payment default.

The company will use proceeds to refinance the existing creditfacilities and to fund a special dividend of $80 million and the$32.5 million acquisition of Ablest Inc.

Pro forma total debt is $358 million as of March 25, 2007.

"The upgrade reflects improving operating performance and therealization of significant cost reductions as a result of thesuccessful integration of Koosharem's acquisition of formerlyunderperforming RemedyTemp Inc. last year," said Standard & Poor'scredit analyst Hal F. Diamond.

Santa Barbara, California-headquartered Koosharem is the 12th-largest staffing company in the U.S. and has a good position inCalifornia, the nation's largest staffing market.

The ratings reflect Koosharem's limited geographic diversity,niche position in the highly competitive and cyclical temporarystaffing industry, and active acquisition orientation. Thecompany has a good track record of integrating acquisitions,having purchased more than 50 staffing companies since 1990.Koosharem doubled its size in 2006 with the RemedyTemp purchaseand exceeded its plan of achieving $27.3 million in annualizedsynergies. Koosharem improved margins through branch closures,reduced headcount, and lower workers' compensation costs.

On April 20, 2007, Lenox Group completed its $275 millionrefinancing, which consists of a $100 million secured term loandue 2013 and a $175 million asset-based revolving credit facilitydue 2012. The company used the proceeds of the amended andrestated term loan facility to refinance $47.4 million of termdebt outstanding and $42.2 million of revolver debt outstanding atApril 20, 2013.

During the quarter ended March 31, 2007, all of the company'sbusiness segments' operating margins declined.

"The ratings on Lenox Group reflect its poor operatingperformance, declining channel sales, and leveraged financialprofile," said Ms. Chiem.

LEXINGTON PRECISION: March 31 Balance Sheet Upside-Down by $29.9MM------------------------------------------------------------------Lexington Precision Corp. reported a net loss of $917,000 on netsales of $22,530,000 for the first quarter ended March 31, 2007,compared with a net loss of $400,000 on net sales of $24,798,000for the same period ended March 31, 2006.

The decrease in net sales was principally a result of decreasedunit sales of automotive components offset, in part, by increasedunit sales of medical components. EBITDA for the first quarter of2007 was $2,970,000, or 13.2% of net sales, compared to EBITDA of$3,828,000, or 15.4% of net sales, for the first quarter of 2006.

At March 31, 2007, the company's balance sheet showed $59,175,000in total assets and $89,081,000 in total liabilities, resulting ina $29,906,000 total stockholders' deficit.

The company's balance sheet at March 31, 2007, also showedstrained liquidity with $25,441,000 in total current assetsavailable to pay $87,818,000 in total current liabilities.

As reported in the Troubled Company Reporter on May 2, 2007, Ernst& Young LLP, in Cleveland, Ohio, expressed substantial doubt aboutLexington Precision Corporation's ability to continue as a goingconcern after auditing the company's financial statements at Dec.31, 2006, and 2005. The auditing firm reported that:

-- The company failed to pay quarterly interest payments that were due on its Senior Subordinated Notes on Nov. 1, 2006, and Feb. 1, 2007, resulting in substantially all of the company's debt to be in default as of Dec. 31, 2006.

-- As of Feb. 28, 2007, the company failed to comply with a fixed charge coverage ratio covenant that is contained in its secured borrowing arrangements.

-- On April 5, 2007, the company was notified that the company's ability to borrow under its revolving line of credit will be terminated after May 7, 2007. The company has been unwilling to agree to the terms proposed by the secured lenders.

-- On April 6, 2007, the company received a notice of acceleration demanding immediate payment in full of a portion of the obligations due under its real estate term loan from an entity that holds $4,000,000 of the loan.

-- The company has a working capital deficiency and a stockholders' deficit.

About Lexington Precision

Lexington Precision Corporation (OTC BB: LEXP) manufactures rubberand metal components that are sold to other manufacturersprimarily in the U.S. The company operates in two segments,Rubber Group and Metals Group. The Rubber Group manufacturesconnector seals used in automotive wiring systems and insulatorsused in automotive ignition wire sets. The Metals Groupmanufactures machined components from aluminum, brass, and steelbars.

MARQUEE HOLDINGS: Consent Solicitation Due Today------------------------------------------------Marquee Holdings Inc. has extended, until 5:00 p.m., today,June 12, 2007, New York City time, its solicitation of consentsfrom holders of its 12% Senior Discount Notes due 2014 to amendthe indenture governing the Notes.

Marquee has also increased the consent fee to consenting holdersfrom $10.00 to $14.44 for each $1,000 in principal amount atmaturity of Notes as to which consents are delivered, subject tothe conditions described in the consent solicitation statement ofMarquee dated June 5, 2007 and the accompanying Letter of Consent.

The Amendment would revise the restricted payments covenant topermit Marquee to make restricted payments in an aggregate amountof $275.0 million prior to making an election to pay cash intereston the Notes. The Amendment will also contain a covenant byMarquee to make an election on Aug. 15, 2007, the next semi-annualaccretion date under the Indenture, to pay cash interest on theNotes. As a result, Marquee would be required to make its firstcash interest payment on the Notes on Feb. 15, 2008.

All holders of the Notes who have previously delivered consents donot need to redeliver such consents or take any other action inresponse to this extension in order to receive the increasedconsent fee upon the successful conclusion of the ConsentSolicitation. Other holders of notes may use the previouslydistributed Letter of Consent for purposes of delivering theirconsents. Marquee reserves the right to terminate, withdraw oramend the Consent Solicitation at any time subject to applicablelaw.

Based in Kansas City, Missouri, AMC Entertainment Inc. --http://www.amctheatres.com/-- is a worldwide leader in the theatrical exhibition industry. The company serves more than 250million guests annually through interests in 415 theatres and5,672 screens in 12 countries including the United States.

MARQUEE HOLDINGS: Fitch to Rate Potential $275MM Term Loan at CCC-----------------------------------------------------------------Fitch has affirmed the Issuer Default Ratings of Marquee HoldingsInc. and its principal operating subsidiary AMC Entertainment,Inc., at 'B' following the company's recent announcement.

Fitch expects to rate the new $400 million senior unsecured termfacility 'CCC/RR6' and would also expect to rate the potential$275 million senior unsecured term loan facility 'CCC/RR6' basedon their deep structural subordination in the capital structure.The Rating Outlook is Stable.

Marquee Holdings has announced an intention to enter into a five-year $400 million senior unsecured term loan facility at anadditional holding company level, named AMC EntertainmentHoldings, Inc., to fund a dividend payout to Marquee's currentshareholders. Neither Marquee or its operating subsidiary AMCEntertainment or its subsidiaries will be a party to thetransaction. Simultaneously, Marquee announced a consentsolicitation to amend the indenture of its existing discount notesdue 2014 to accommodate a dividend payment of up to $275 millionprior to the next accretion date on Aug. 15, 2007. If theamendment is approved, Marquee intends to use cash on hand at AMCEntertainment but also has an option to fund the dividend byentering into an additional $275 million senior unsecured termloan facility. The note holders are offered a 1.44% consent feeat maturity. Regardless of the results of the solicitation,entering into the proposed $400 million facility would trigger acash interest payout on the discount notes estimated atapproximately $29 million per year beginning on Feb. 15, 2008.This announcement follows the suspension of Marquee's IPO on May3, 2007.

Fitch believes that AMC/Marquee has sufficient financialflexibility at its current rating to fund the additional debtservice payments due to the recent debt reduction, solid operatingperformance and expectations for a continued strong box officeperformance for the remainder of the summer season. In March2007, the company allocated all proceeds from the NationalCineMedia IPO and $109 million in cash toward debt repayment andfully redeemed approximately $600 million of its higher couponoperating company senior and subordinated notes. Therefore, whilethe proposed transaction will result in higher consolidated debtlevels, potentially reaching the level prior to the debtreduction, Fitch notes that the new debt does not affect thedefault probability and recovery expectations of the operatingcompany debt ranked higher in the capital structure.

Liquidity profile may be weakened if the company chooses to fundthe $275 million additional dividend with cash on hand at AMC,pending the results of the consent solicitation. The companyreported a proforma cash balance of $362 million and $177 ofavailability under its revolving facility as of Dec. 28, 2006.

Following the suspension of the AMC IPO in early May 2007, Fitch'sratings incorporated the potential for another equity offering anda dividend, albeit a lower one, to the shareholders. Therefore,Fitch believes that the announced plan to return capital to thecurrent shareholders is within the existing and expected financialpolicies reflected by the 'B' rating.

Based in Kansas City, Missouri, AMC Entertainment Inc. --http://www.amctheatres.com/-- is a worldwide leader in the theatrical exhibition industry. The company serves more than 250million guests annually through interests in 415 theatres and5,672 screens in 12countries including the United States, HongKong, Brazil and the United Kingdom.

MARQUEE HOLDINGS: Moody's Revises Outlook to Negative from Stable-----------------------------------------------------------------Moody's Investors Service changed the outlook for Marquee HoldingsInc. (parent of AMC Entertainment Inc.) to negative from stable.

Moody's also assigned a B3 rating to its proposed debt at AMCEntertainment Holdings, Inc., a newly created entity that willbecome the parent of Marquee. The company intends to use proceedsto fund a dividend to Marquee's current stockholders.

The negative outlook reflects concerns over the increase inleverage to 7.2 times debt-to-EBITDA from 6.7 times (based onestimated results for the year ended March 31, 2007, and as perMoody's standard adjustments, which include operating leases).Furthermore, the transaction creates no value for creditors andrepresents a reversal from the commitment to improving Marquee'scredit profile that management demonstrated by repaying debt withproceeds from the National CineMedia transactions. IfMarquee's debt-to-EBITDA remains in excess of 7 times over thenext year, or if the company does not generate positive free cashflow, Moody's would likely downgrade the corporate family ratingto B2. Conversely, Moody's would consider stabilizing the outlookwith:

(1) leverage below 7 times and on track to fall to the low to mid 6 times; and

(2) positive free cash flow.

The B3 rating on the proposed debt incorporates its junior-mostposition in the capital structure, and the LGD6 93% reflects itslow recovery prospects as a result of the material amount ofclaims ranking senior to it that would have to be repaid first ina default scenario. This new debt does not benefit from anysubsidiary guarantees, nor does it have a security interest in anyassets of the company. It is structurally subordinated to allother debt in the capital structure, which, inclusiveof capitalized operating leases, comprises approximately $5.5billion. The introduction of this junior-ranking claim of size tothe company's consolidated capitalization, however, results in anupgrade of the rating for the higher-ranking (via structuralseniority) senior subordinated notes to B2, from B3, as the LGDestimate is reduced. All other ratings were affirmed. A summaryof rating actions follows, includingupdated LGD assessments and point estimates to reflect the newcapital structure.

The B1 corporate family rating for Marquee continues to reflecthigh leverage, sensitivity to product from movie studios, and aweak industry growth profile, offset by good liquidity and theadvantages of scale and geographic diversity.

Headquartered in Kansas City, Mo., AMC Entertainment Inc. --http://www.amctheatres.com/-- is a theatrical exhibition company with interests in about 382 theatres with 5,340 screens as of Dec.28, 2006. About 87 percent of the company's theatres are locatedin the U.S. and Canada, and 13 percent in Mexico, Argentina,Brazil, Chile, Uruguay, Hong Kong, France, and the U.K.

S&P also assigned a 'CCC+' rating to AMC Entertainment HoldingsInc.'s proposed $400 million senior unsecured pay-in-kind termloan facility due 2012 and a 'CCC+' rating to its 364-day$275 senior unsecured PIK term loan due 2008.

At the same time, S&P affirmed its issue ratings on AMCEntertainment Inc. and its parent company, Marquee Holdings Inc.

Of the nine lowered ratings, S&P placed one on CreditWatch withnegative implications, four remain on CreditWatch negative, andS&P removed two from CreditWatch negative.

Concurrently, S&P placed its ratings on three additional classeson CreditWatch negative. Lastly, we affirmed the ratings on theremaining six classes from these transactions.

The downgrades and CreditWatch placements reflect the continuedweaker-than-expected collateral pool performance. In the past sixmonths, monthly net losses for series 2005-1 have consistentlyexceeded excess interest cash flow. This adverse performance hascaused a complete erosion of overcollateralization, resulting in acumulative principal write-down of $1.840 million to class M-9.

As of the May 2007 remittance report, cumulative realized losseswere 6.10% ($15,087,941) of the original pool balance. Inaddition, serious delinquencies (90-plus-days, foreclosures, andREOs), as a percentage of the current pool balance, were 3.14%($3,259,923). For series 2006-1, monthly losses have continued tooutpace excess interest cash flow.

This adverse performance pattern has caused a complete erosion ofO/C, resulting in cumulative principal write-downs of $1.045million and $5.492 million to classes M-7 and M-8, respectively.

As of the May 2007 remittance period, cumulative realized losseswere 8.49% ($27,441,281) of the original pool balance.

Standard & Poor's will continue to closely monitor the performanceof the certificates with ratings on CreditWatch. If monthlylosses continue to outpace monthly excess interest cash flow,additional negative rating actions can be expected. Conversely,if pool performance improves and credit support is not furthercompromised, we will affirm the ratings and remove them fromCreditWatch.

S&P removed the ratings on class M-8 from series 2005-1 and classM-6 from series 2006-1 from CreditWatch negative because they werelowered below 'B-'. According to Standard & Poor's surveillancepractices, classes of certificates or notes from RMBS transactionswith ratings lower than 'B-' are no longer eligible to be onCreditWatch negative.

The affirmations are based on credit support percentages that aresufficient to maintain the current ratings, despite theunfavorable performance trend.

The affirmations are the result of limited amortization and stableloan performance. As of the June 2007 distribution date, thetransaction's principal balance has decreased 6% to $663.9 millionfrom $706.5 million at issuance. Based on an analysis of year-end2006 income and expenses, the Fitch stressed debt service coverageratio for the transaction is 1.58 times.

The certificates are collateralized by seven fixed rate mortgageloans, two of which are interest-only retail portfolio loans,Edens & Avant I and II (29.4%), four are loans on regional malls(61.7%) located in four states, and one is a loan on an officeproperty, Crystal Park IV, (8.9%) located in suburbanVirginia/Washington D.C. The six retail loans all have investmentgrade credit assessments, and as of June 2007, 23.6% of the Edens& Avant portfolio has defeased. All of the mall loans, GrapevineMills in Texas (22.1%), Mall of New Hampshire (14.4%), WestsidePavilion in Los Angeles (13.9%) and Northtown Mall in Spokane,Washington (11.3%) have improved DSCR since issuance.

The Crystal Park IV office loan is secured by a class A-suburbanoffice building located in the Crystal City submarket ofArlington, Virginia, U.S. Air, a substantial tenant, vacated inMarch 2006. Occupancy at the property has increased to 72% as ofMarch 2007, up from 51% at YE 2006. Although the loan continuesto perform below expectations at issuance, Fitch anticipates theowner/manager will be successful in improving the collateralperformance.

Certain other ratings were withdrawn or remain on CreditWatch, andratings of 'AAA' rated, insured EETCs, which were not onCreditWatch, were affirmed.

"The upgrades reflect improved credit quality followingNorthwest's May 31, 2007, emergence from bankruptcy and our reviewof factors that affect expected payment prospects, including thosein any future insolvency proceedings," said Standard & Poor'scredit analyst Philip Baggaley. S&P's criteria for rating EETCsincorporate credit for the likelihood of continued payment per theterms of the certificates (which require timely interest payments,backed by liquidity facilities sufficient to pay up to 18 monthsof interest obligations, and "soft amortization" of principal,which is due at the legal final maturity of the certificates) andcredit for collateral coverage which could permit repayment usingproceeds from repossessing and selling aircraft.

Upgrades in each case factored in Northwest's revised corporatecredit rating, which was raised to 'B+' from 'D' on May 31. Inaddition, the factors specific to individual EETCs wereconsidered, including collateral coverage, the effect of therevised priority of payments triggered by Northwest's bankruptcyfiling, and the effect of some liquidity providers terminatingtheir facilities supporting EETCs.

The 'B+' corporate credit rating reflects Northwest'sparticipation in the competitive, cyclical, and capital-intensiveU.S. airline industry, on a still highly leveraged financialprofile, and with substantial upcoming capital expenditures tomodernize its aircraft fleet. The rating also incorporates theairline's improved operating cost structure (mostly due to laborconcessions) and reductions in debt and leases achieved in Chapter11.

OSI RESTAURANT: Moody's Cuts Rating to B1 on Three Bank Loans-------------------------------------------------------------Moody's Investors Service affirmed the B2 corporate family ratingof OSI Restaurant Partners, Inc. in addition to other ratingactions as:

The B2 corporate family rating reflects OSI's high financialleverage, modest coverage, and marginal free cash flow generation,as well as the highly competitive environment within the casualdining segment of the restaurant industry which will likelypersist over the intermediate term. Moody's believes theoperating environment in the casual dining space will remainchallenging as consumers continue to focus on greater value inregards to food prepared away from home. However, the ratingsalso incorporate OSI's significant scale and scope, the benefitsof a diversified revenue stream stemming from the various conceptsand good liquidity.

The lowering of the senior secured bank loan ratings was promptedby the change in OSI's liability structure as a result of anincrease in total secured debt of approximately $230 million, dueto the re-allocation of approximately $150 million of unsecureddebt to secured debt, in addition to $80 million of additionalsecured debt required to fund the transaction.

The stable outlook anticipates that while the operatingenvironment will remain challenging, OSI's strategic initiativesand targeted cost savings should help to improve debt protectionmetrics and overall financial flexibility over time. The stableoutlook also indicates good liquidity and reflects Moody'sexpectation that OSI's internally generated cash flow and cashbalances will be sufficient in funding capital expenditures,mandatory term loan B amortization, working capital fluctuationsand other internal investments over the next twelve months.

Proceeds from the proposed transaction together with a commercialmortgage backed transaction and contributed equity will fund theacquisition of OSI by two private equity sponsors, Bain CapitalPartners and Catterton Partners, along with other sponsors thatinclude OSI's founders and members of the current management team.

As is customary, all of Moody's assigned ratings are subject toreview of final documentation.

The company's bank loan ratings, including the ratings on its$150 million revolving credit facility due 2013, $1.31 billionterm loan B due 2014, and $100 million prefunded revolving creditfacility due 2013, have been lowered to 'BB-' from 'BB'.

At the same time, the rating on OSI's $550 million 9.625% notesdue 2015 has been lowered to 'CCC+' from 'B-.'

The outlook is stable.

The downgrade follows OSI's announcement that the company willfund the $80 million increase in its purchase price with debtrather than an equity contribution. The resulting capitalstructure is highly leveraged at nearly 8x and results in thincash flow protection measures. S&P expects the transactionto close by June 19, 2007.

"A positive outlook would be considered," said Standard & Poor'scredit analyst Jackie E. Oberoi, "were OSI to reduce leveragethrough measures that include increased profits as a result ofimprovement in same-store sales for OSI's core Outback Steakhouseconcept and continued success with recent expense-reductionmeasures."

PAC-WEST TELECOMM: Section 341(a) Meeting Continued to July 11--------------------------------------------------------------The U.S. Trustee for Region 3 will continue a meeting of Pac-WestTelecomm Inc.'s creditors on July 11, 2007, at 10:00 a.m., andwill be held at the J. Caleb Boggs Federal Building, 844 KingStreet, Room 2112 in Wilmington, Delaware.

The creditors' meeting was initially held on June 7, 2007, at10:30 a.m.

All creditors are invited, but not required, to attend. ThisMeeting of Creditors offers the one opportunity in a bankruptcyproceeding for creditors to question a responsible office of theDebtor under oath about the company's financial affairs andoperations that would be of interest to the general body ofcreditors.

About Pac-West Telecomm

Based in Stockton, California, Pac-West Telecomm Inc. (OTC:PACW.PK) -- http://www.pacwest.com/-- is a local exchange carrier. Pac-West's network averages over 120 million minutes ofvoice and data traffic per day, and carries an estimated 20% ofthe dial-up Internet traffic in California. In addition toCalifornia, Pac- West has operations in Nevada, Washington,Arizona, and Oregon.

PACIFIC LUMBER: May Continue to Use Cash Collateral Until June 22-----------------------------------------------------------------The Hon. Richard S. Schmidt of the United States Bankruptcy Courtfor the Southern District of Texas has authorized Pacific LumberCompany and its debtor-affiliates to continue using cashcollateral through and including June 22, 2007.

The Debtors have not filed a revised budget with the Court as ofJune 7, 2007.

As reported in the Troubled Company Reporter on May 3, 2007, theDebtors are only permitted to use cash collateral for thepurposes enumerated in the budget. The Debtors are not permittedto use cash collateral for payment of professional fees,disbursements, costs, or expenses incurred in connection withasserting any claims or causes of action against the Lenders.

The Court has scheduled a hearing for June 22, 2007, to considerthe Debtors' continued use of cash collateral.

About Pacific Lumber

Headquartered in Oakland, California, The Pacific Lumber Company-- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry,including the growing and harvesting of redwood and Douglas-firtimber, the milling of logs into lumber and the manufacture oflumber into a variety of finished products.

When Pacific Lumber filed for protection from its creditors, itlisted estimated assets and debts of more than $100 million.Scotia Pacific listed total assets of $932,000,000 and total debtsof $765,978,335. The Debtors' exclusive period to file a chapter11 plan expires on Sept. 18, 2007, as extended. The Debtors'exclusive period to solicit acceptances of that plan expires onNov. 19, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No.17, http://bankrupt.com/newsstand/or 215/945-7000).

PACIFIC LUMBER: Scopac May Use Cash Collateral Until August 31--------------------------------------------------------------The United States Bankruptcy Court for the Southern District ofTexas has authorized Scotia Pacific Company LLC to continue usingcash collateral solely in accordance with a cash flow budgetthrough the weekending August 31, 2007.

The Court also approved the stipulation by Scotia Pacific, theOfficial Committee of Unsecured Creditors, Bank of AmericaNational Trust and Savings and Bank of New York Trust CompanyN.A., as successor indenture trustee under the Indenture datedJuly 1998 between Scopac and Staten Street Bank and TrustCompany, that the Committee has until July 9, 2007, to investigatethe amount of the Prepetition Claims, and the extent, validity andpriority of liens, under the Prepetition Collateral, of BofA andBoNY.

A full-text copy of Scopac's cash flow budget through the weekending Aug. 31, 2007, is available for free at:

As reported in the Troubled Company Reporter on March 16, 2007,the Court said that Scopac's request for use of cash collateralis necessary, essential and appropriate for the preservation ofits estates and the operation of its business.

BoNY Opposes Scopac Cash Collateral Budget

The Bank of New York Trust Company N.A., as indenture trustee forthe Timber Notes issued by Scopac, does not consent to Scopac'sproposed cash collateral budget for the period ending August2007.

BoNY, however, is willing to commit to Scopac's use of cashcollateral for one week pursuant to an amended supplementalbudget to permit negotiations on three issues where Scopac wishesto:

(a) interfere with BonY's choice of counsel and financial advisor;

(b) avoid paying fees that Scopac previously estimated under several budgets; and

As to the Amended Supplemental Budget, BoNY wants Houlihan Lokeyto be permitted to finish its due diligence with Scopac's chieffinancial officer, Mr. Clement tells the Court.

BoNY also wants Scopac to take the monthly $450,000 that it hasplaced in each draft of the Supplemental Budget for FulbrightJaworski and Houlihan Lokey, and apply the amount to budget itemsfor BoNY.

BoNY wants the monthly $450,000 to be broken down into separatepayments of:

-- $150,000 to Houlihan Lokey, -- $250,000 to Fulbright & Jaworski, and -- $50,000 to Thompson & Knight, if it bills that much.

On the other hand, Scopac has continued its curiosity regardingthe amount of certain Timber Noteholders' holdings, Mr. Clementnotes. "This is intrusive on confidential commercialinformation," Mr. Clement avers.

"Since [BoNY] has no duty to provide this information pursuant toRule 2019 of the Federal Rules on Bankruptcy Procedure, such aholder, having permitted it to be voluntarily provided, has noobligation to provide any further information concerning theprice at which it bought its notes," Mr. Clement maintains.

In view of the stated reasons, BoNY does not consent to Scopac'sAmended Supplemental Budget.

About Pacific Lumber

Headquartered in Oakland, California, The Pacific Lumber Company-- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry,including the growing and harvesting of redwood and Douglas-firtimber, the milling of logs into lumber and the manufacture oflumber into a variety of finished products.

When Pacific Lumber filed for protection from its creditors, itlisted estimated assets and debts of more than $100 million.Scotia Pacific listed total assets of $932,000,000 and total debtsof $765,978,335. The Debtors' exclusive period to file a chapter11 plan expires on Sept. 18, 2007, as extended. The Debtors'exclusive period to solicit acceptances of that plan expires onNov. 19, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No.17, http://bankrupt.com/newsstand/or 215/945-7000).

PACIFIC LUMBER: Noteholders to Appeal Scopac Single Asset Order--------------------------------------------------------------The Fifth Circuit of the Court of Appeals has granted the petitionof the Ad Hoc Group of Noteholders in Pacific Lumber Company's anddebtor-affiliates' bankruptcy cases petition, for leave to fileappeal of the United States Bankruptcy Court's denial of thepanel's request to deem Scotia Pacific Company LLC as a singlereal estate debtor, under Section 158(d) of the Judiciary andJudicial Procedures Code.

Section 158(d) provides that upon consensual certification of theparties or certification by the relevant Bankruptcy Court orDistrict Court, an appeal may be taken directly to the UnitedStates Court of Appeals, if any of three circumstances exist:

1. The judgment, order or decree involves a question of law as to which there is no controlling decision of the court of appeals for the circuit or of the Supreme Court of the United States, or involves a matter of public importance;

2. The judgment, order or decree involves a question of law requiring resolution of conflicting decisions; or

3. An immediate appeal from the judgment, order or decree may materially advance the progress of the case or proceeding in which the appeal is taken.

As reported in the Troubled Company Reporter on April 17, 2007,the Noteholder Committee wanted the Fifth Circuit to reviewwhether:

(i) Section 101(51B) of the Bankruptcy Code is limited to "passive" businesses that merely "own or acquire property merely with an eye for holding it and flipping it when the market turns or idly sit and collect rent";

(ii) Section 101(51B) applies to an "active" business, like Scopac's silvicultural operations, that involve operating real property to generate substantially all of the Debtor's gross income; and

(iii) the term "single property or project" under Section 101(51B) applies to Scopac's silvicultural operations, which involve operating the Scopac Timberland and its real property interests in timber pursuant to a common plan.

The Noteholder Committee asserted that the SARE Appeal presentsmatters of public importance, and would materially advance theprogress of Scopac's case.

About Pacific Lumber

Headquartered in Oakland, California, The Pacific Lumber Company-- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry,including the growing and harvesting of redwood and Douglas-firtimber, the milling of logs into lumber and the manufacture oflumber into a variety of finished products.

When Pacific Lumber filed for protection from its creditors, itlisted estimated assets and debts of more than $100 million.Scotia Pacific listed total assets of $932,000,000 and total debtsof $765,978,335. The Debtors' exclusive period to file a chapter11 plan expires on Sept. 18, 2007, as extended. The Debtors'exclusive period to solicit acceptances of that plan expires onNov. 19, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No.17, http://bankrupt.com/newsstand/or 215/945-7000).

PATHEON INC: Posts $22 Million Net Loss in Second Quarter 2007--------------------------------------------------------------Patheon Inc. reported that its second-quarter revenues were$181 million, which decreased by $8.9 million, or 5%, over thesame period a year ago. The net loss for the quarter was$22 million, as compared with net earnings of $3 million a yearago.

The company's net income in the second quarter was impacted byone-time expenses of $13.5 million in connection with itsrefinancing activities. Net income was also impacted byrepositioning expenses of $4 million, comprising $600,000 inseverance costs for further reductions in the size of theworkforce, $900,000 in professional fees relating to amanufacturing efficiency review process currently underway atseveral sites, and $2.4 million in costs relating to work on thecompany's strategic review process.

Six Months Operating Results

For the six months ended April 30, 2007, the company's revenuesincreased 1% to $352.7 million. The company had a net loss of$24 million, compared with a net loss of $8.5 million a year ago.

As at April 30, 2007, the company listed total asset of$833.8 million, total liabilities of $582.1 million, and totalshareholders' equity of $251.7 million.

The company held $46.5 million in cash and cash equivalents atApril 30, 2007, as compared with $50.7 million at Oct. 31, 2006.

"Our European, Canadian and Cincinnati operations continued toPerform well in the second quarter, achieving on a consolidatedbasis an EBITDA margin before repositioning costs of 17%," saidRiccardo Trecroce, chief executive officer, Patheon Inc.

"This performance was moderated by the impact of significant year-over-year volume declines for two major products manufactured atour Caguas, Puerto Rico facility," said Mr. Trecroce. "Returningour Puerto Rico operations to profitability is a top priority forthe company. As a first step, we are implementing a plan toreduce costs in line with reduced revenues."

Capital Restructuring

During the second quarter, as previously announced, Patheoncompleted its financial restructuring process, with the purchaseof $150 million of convertible preferred shares of the company byJLL Partners, and the refinancing of its existing North Americanand U.K. debt through new credit facilities with J.P. MorganSecurities and GE Commercial Finance.

"The successful completion of our capital restructuring processwas a major achievement, providing a stable, long-term financialfoundation to grow and operate our business effectively," saidMr. Trecroce.

Update on Strategic Initiatives

"We are making good progress on our Canadian site restructuringinitiative," Mr. Trecroce reported. "For the Niagara-Burlingtondivestiture, we have prepared and issued a confidentialinformation memorandum to interested parties and expect tocomplete the process of identifying potential buyers by the end ofJune. On the York Mills-Whitby consolidation, we are workingclosely with our clients and our employees to develop detailedtransfer plans, and have entered into a listing agreement with arealtor for the sale of the land and facility after the transfershave been completed."

Outlook

Revenues for the third quarter of 2007 are expected to be aboutthe same as the second quarter of 2007. The company continues toexpect that revenues from current operations for 2007 will becomparable to 2006.

About Patheon

Patheon Inc. (TSX: PTI) - http://www.patheon.com/ -- provides drug development and manufacturing services to the internationalpharmaceutical companies located primarily in North America,Europe and Japan. It produces both prescription and over-the-counter drugs for its clients. Patheon provides manufacturingservices for a range of products in many dosage forms andpackaging, such as compressed tablets, hard-shell capsules,liquids and powders filled in ampoules, vials, bottles or pre-filled syringes. The pharmaceutical development services providedby Patheon include dosage form development services, scale-up andtechnology transfer services, and manufacturing of pilot batchesof drugs.

* * *

As reported in the Troubled Company Reporter on April 16, 2007,Standard & Poor's Ratings Services assigned its 'B+' long-termcorporate credit rating to Canadian contract drug manufacturerPatheon Inc.

At the same time, Standard & Poor's assigned its 'BB' bank loanrating, with a recovery rating of '1', to Patheon's $75 millionABL revolver and its 'B+' bank loan rating, with a recovery ratingof '3', to the company's $150 million term B facility. The '1'recovery rating indicates a full recovery of principal (100%), andthe '3' recovery rating indicates a meaningful recovery ofprincipal (50%-80%), in a default scenario. Standard & Poor'salso assigned its 'B-' rating to Patheon's proposed S$150 million8.5% convertible preferred shares. The outlook is negative.

PHOTRONICS INC: Earns $14.1 Million for the Quarter Ended April 29------------------------------------------------------------------Photronics Inc. reported fiscal 2007 second quarter results forthe period ended April 29, 2007, its net income amounted to$14.1 million, compared to net income of $5.3 million for thesecond quarter of fiscal 2006. Net income for the second quarterof 2007 includes a net benefit of $7.9 million relating to theresolution and settlement of United States and foreign taxliabilities associated with uncertain tax positions in prioryears. Net income for the second quarter of 2006 included acharge of $11.4 million after tax in connection with the company'spreviously disclosed restructuring of its operations in NorthAmerica.

Sales for the quarter were $109.6 million, compared to$119.5 million for the second quarter of fiscal year 2006.Semiconductor photomasks accounted for $88.3 million, or 81% ofrevenues during the second quarter of fiscal 2007, while flatpanel display photomasks accounted for $21.3 million, or 19% ofrevenues. During the second quarter of fiscal 2006, semiconductorphotomasks accounted for 76% of revenues and FPD photomasksaccounted for 24% of revenues.

Half-Year Results

Sales for the first six months of 2007 were $215.6 million,compared to $231.4 million for the first half of fiscal 2006.Semiconductor photomasks accounted for $173.9 million, or 81% ofrevenues during the first six months of fiscal 2007, while FPDphotomasks accounted for $41.7 million, or 19% of revenues. Year-over-year, semiconductor photomask revenues decreased 2%, whileFPD photomask revenues decreased 22.7%.

Net income for the first six months of fiscal 2007 amounted to$21.9 million, compared to the prior year's first six months netincome of $15 million.

Balance Sheet Data

The company recorded $977.3 million in total assets,$286.7 million in total liabilities, $47.5 million in minorityinterest, and $643.2 million as of April 29, 2007.

The company's working capital increased $15.6 million to$143.2 million at April 29, 2007, as compared to Oct. 29, 2006,primarily as a result of increased cash generated from operations,and a decrease in the current portion of long-term borrowings. AtApril 29, 2007, $125 million of the company's outstanding$150 million, 2.25% convertible subordinated notes due in April of2008, was reported as long-term in connection with $125 million ofcredit available to the company under a five-year, revolvingcredit facility agreement entered into on June 6, 2007, with agroup of financial institutions.

Cash, cash equivalents and short-term investments decreased to$153.7 million at April 29, 2007, as compared to $199.3 million atOct. 29, 2006, primarily due to the redemption of $87.1 million ofthe remaining outstanding balance of the company's 4.75%convertible subordinated notes.

Michael J. Luttati, chief executive officer commented, "Whileperformance for the quarter was at the lower end of our guidancerange as a result of industry wide semiconductor and flat panelmarket conditions, we are pleased with the progress we madeduring the quarter. Our plans to further penetrate thesemiconductor industry's sub-90 nanometer market are provingsuccessful, as revenues increased sequentially with an especiallystrong performance in Asia. In flat panel displays, the outlookis improving after taking nearly a year to work throughfluctuating capacity and end market dynamics. Our technologyfocus was recently rewarded with Photronics having shipped ourfirst Gen 8 production mask set prior to the quarter's close."

Mr. Luttati concluded, "As we move into the second half of fiscal2007, we will continue executing against our strategy to increaseshare in the advanced semiconductor mask and flat panel markets.Near-term market volatility aside, we are optimistic that thecompany is significantly improving its competitive position."

About Photronics, Inc.

Photronics, Inc. -- http://www.photronics.com/-- is a worldwide manufacturer of photomasks, which are high precision quartz platesthat contain microscopic images of electronic circuits. A keyelement in the manufacture of semiconductors and flat paneldisplays, photomasks are used to transfer circuit patterns ontosemiconductor wafers and flat panel substrates during thefabrication of integrated circuits, a variety of flat paneldisplays and, to a lesser extent, other types of electrical andoptical components. They are produced in accordance with productdesigns provided by customers at strategically locatedmanufacturing facilities in Asia, Europe, and North America. InEurope, the company maintains operations in Dresden, Germany andManchester, U.K.

The company will use a portion of the net proceeds of the offeringto repay all of its outstanding term loans under its creditagreement.

In addition, the company will use a portion of the net proceeds ofthis offering to purchase $25 million aggregate principal amountof its 8-1/4% senior subordinated notes due 2012. The companyexpects to use the remaining net proceeds from the offering forgeneral corporate purposes and to provide a portion of the fundsneeded for one or more of its capital projects.

The new senior subordinated notes have not be registered under theSecurities Act of 1933 or any state securities laws and may not beoffered or sold in the United States absent registration or anapplicable exemption from registration requirements.

Headquartered in Las Vegas, Nevada, Pinnacle Entertainment Inc.(NYSE: PNK) -- http://www.pnkinc.com/-- owns and operates casinos in Nevada, Louisiana, Indiana and Argentina, owns a hotel inMissouri, receives lease income from two card club casinos inThe Los Angeles metropolitan area, has been licensed to operatea small casino in the Bahamas, and owns a casino site and hassignificant insurance claims related to a hurricane-damaged casinopreviously operated in Biloxi, Mississippi. Pinnacle opened amajor casino resort in Lake Charles, Louisiana in May 2005 anda new replacement casino in Neuquen, Argentina in July 2005.

* * *

As reported in the Troubled Company Reporter on June 4, 2007,Standard & Poor's Ratings Services assigned its 'B-' rating toPinnacle Entertainment Inc.'s proposed $350 million seniorsubordinated notes due 2015.

PLASTICON INT'L: Suspends Share Exchange due to Debt Restructuring------------------------------------------------------------------Plasticon International Inc. has postponed its share exchangeprogram until further notice. Plasticon has postponed theexchange in order to allow the company to coordinate its capitalstock reorganization with the restructuring of its debt.

Preparations were made earlier this year for Plasticon toreorganize its equity structure by offering to its shareholders ofrecord the opportunity to exchange Common Stock for a newlycreated class of Convertible Preferred Stock.

On May 16, 2007, the company filed a Chapter 11 corporatereorganization proceeding in order to preserve the value of itssubsidiary, Pro Mold Inc., whose assets were in jeopardy. Chapter11 allows a company to reorganize while it continues to operateand grow its business, as opposed to liquidation.

"The board of directors of the company has decided to takeadvantage of the opportunity presented by the Chapter 11proceeding to restructure its capital stock at the same time itrestructures its debt through a plan of reorganization," JimTurek, CEO and president of Plasticon International Inc., stated.The company expects to proceed with the exchange program at alater date.

Plasticon International disclosed that the company's wholly ownedsubsidiary, SEMCO Manufacturing, is in the final stages ofinstalling flooring in a Lexington, Kentucky, Cadillac and Volvodealership. The project is valued at an estimated $30,000 inrevenue and is expected to be completed in approximately twoweeks.

About Plasticon International

Based in Lexington, Kentucky, Plasticon International, Inc.(PINKSHEETS: PLNI) -- http://www.plasticonintl.com/-- designs, produces, and distributes high-quality concrete accessories,informational and directional signage and plastic lumber, whichare all produced from recycled and recyclable plastics. Plasticonis an innovator of cutting edge design, engineering, andproduction of industrial and commercial products. Plasticon is agreen company, environmentally friendly, using recycled plasticsto produce its line of products.

Plasticon International and its debtor-affiliate, Pro Mold Inc.,filed for Chapter 11 protection on May 16, 2007 (Bankr. E.D. Ky.Case Nos. 07-50934 & 07-50935). Robert J. Brown, Esq., of WyattTarrant & Combs LLP represents the Debtors in their restructuringefforts. As of Sept. 30, 2006, the Debtors reporter total assetsof $8,156,339 and total debt of $8,965,473.

PORTRAIT CORP: CPI Completes Acquisition of All Operating Assets----------------------------------------------------------------CPI Corp. disclosed the completion of its planned acquisition ofsubstantially all of the operating assets of Portrait Corporationof America, Inc. and its foreign and domestic affiliates.

With expiration of the requisite pre-merger notice period underthe Hart-Scott-Rodino Antitrust Improvement Act on May 23, 2007and final approval of the transaction by the United StatesBankruptcy Court for the Southern District of New York on June 4,2007, the parties were able to consummate the transaction wellahead of the June 30th deadline established under their definitiveagreement announced on May 2, 2007.

CPI paid a final purchase price of $82.5 million in cash andassumed certain liabilities by refinancing its credit facilitieswith LaSalle Bank, N.A. The refinancing also closed on June 8,2007.

As a result of the acquisition, CPI now operates 2,055 portraitstudios in Wal-Mart stores and supercenters in the U.S., PuertoRico, Canada, Mexico and the United Kingdom, bringing theCompany's total studio count to 3,095. CPI is the long-standingexclusive operator of portrait studios in Sears stores in the U.S.and Canada. In their most recently completed fiscal years, theCPI and PCA studios generated combined sales of $586 million andserved approximately 8.5 million customers.

David Meyer, Chairman of the Board of Directors of CPI, commented,"We are pleased to welcome PCA's many outstanding associates tothe CPI family. The combination of the operations of PCA with CPIcreates the clear leader in the portrait studio market, and welook forward to capitalizing quickly on the complementarystrengths of our two organizations. We have already begun makingpreparations to convert the PCA studios to digital technology andexpect to commence conversions this summer."

Continuing, Mr. Meyer said, "We are excited about the enormouspotential of this combination and are confident that it willbenefit our customers, employees and retail partners as well asour shareholders."

Portrait Corporation of America Inc. -- http://pcaintl.com/-- provides professional portrait photography products and servicesin North America. The Company operates portrait studios withinWal-Mart stores and Supercenters in the United States, Canada,Mexico, Germany, and the United Kingdom. The company alsooperates a modular traveling business providing portraitphotography services in additional retail locations and to churchcongregations and other institutions. Portrait Corporation andits debtor-affiliates filed for Chapter 11 protection on Aug. 31,2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., atCadwalader Wickersham & Taft LLP, represents the Debtors in theirrestructuring efforts. Berenson & Company LLC serves as theDebtors' Financial Advisor and Investment Banker. Kristopher M.Hansen, Esq., at Stroock & Stroock & Lavan LLP represents theOfficial Committee of Unsecured Creditors. Peter J. SolomonCompany serves as financial advisor for the Committee. At June30, 2006, the Debtor had total assets of $153,205,000 andliabilities of $372,124,000. The Court has set July 11, 2007, toconsider confirmation of the Debtor's Amended Chapter 11 Plan ofReorganization.

PRIMUS TELECOM: Exchanged 6MM Shares for Its $5MM Debentures-----------------------------------------------------------------Primus Telecommunications Group, Inc., on June 6, 2007, exchanged6,000,000 shares of its common stock for $5.0 million principalamount of its Step Up Convertible Subordinated Debentures dueAugust 2009.

The common stock was issued pursuant to an exemption under Section3(a)(9) of the Securities Act of 1933, as amended.

This exchange, and the resulting extinguishment of $5.0 million inDebentures, reduces the outstanding principal of the Debentures to$22.5 million. The company will save approximately $800,000 ininterest to maturity as a result of this extinguishment.

Based in McLean, Virginia, PRIMUS Telecommunications Group Inc.(NASDAQ: PRTL) -- http://www.primustel.com/-- offers international and domestic voice, voice-over-Internet protocol,Internet, wireless, data and hosting services to business andresidential retail customers and other carriers located primarilyin the U.S., Canada, Australia, the U.K. and western Europe.

PRIMUS provides services over its global network of owned andleased transmission facilities, including about 350 points-of-presence throughout the world, ownership interests in underseafiber optic cable systems, 16 carrier-grade international gatewayand domestic switches, and a variety of operating relationshipsthat allow it to deliver traffic worldwide.

At March 31, 2007, the company's balance sheet showed total assetsof $432.6 million and total liabilities of $904.8 million,resulting in a total stockholders' deficit of $472.3 million.

The engagement of Ernst & Young LLP was approved by the AuditCommittee of the company's Board of Directors.

During the years ended October 31, 2006 and 2005, during thetransition period from November 1, 2006 through December 31, 2006,and from January 1, 2007 through June 7, 2007, the company did notconsult with Ernst & Young LLP with respect to any of theapplication of accounting principles to a specified transaction,either completed or proposed; the type of audit opinion that mightbe rendered on the Company's financial statements; or any matterthat was either the subject of a disagreement (as defined in Item304(a)(1)(iv) of Regulation S-K) or a reportable event of the typedescribed in Item 304(a)(1)(v) of Regulation S-K.

SAKS INC: May Sales Increase to $248.9 Million----------------------------------------------Saks Incorporated reported that its owned sales totaled$248.9 million for the four weeks ended June 2, 2007, comparedto $178.5 million for the four weeks ended May 27, 2006, a 39.4%increase. Comparable store sales increased 37.5% for the four-week period.

As previously disclosed, May comparable store sales werepositively impacted by a promotional calendar shift. Due to thisshift, management expects that June comparable store sales will benegative. The company continues to expect low-double digitcomparable store sales growth for the second fiscal quarter.

For May, the strongest categories at Saks Fifth Avenue stores werewomen's designer sportswear and "gold range" apparel, handbags,women's shoes, and men's shoes and advanced sportswear. Thesoftest categories at Saks Fifth Avenue were designer evening,children's apparel, and fashion jewelry. Saks Direct and Saks Off5th also performed well for the month.

On a year-to-date basis, for the four months ended June 2, 2007,owned sales totaled $1 billion, compared to $854.9 million for thefour months ended May 27, 2006, a 21% increase. Comparable storesales increased 19.3% for the four-month period.

As reported in the Troubled Company Reporter on June 1, 2007,Fitch Ratings has affirmed its Issuer Default Rating of SaksIncorporated at 'B' and its rating of the company's secured bankcredit facility at 'BB/RR1'. In addition, Fitch has upgraded thecompany's senior unsecured notes to 'B+/RR3' from 'B/RR4'. TheRating Outlook has been revised to Stable from Negative.

Official creditors' committees have the right to employ legal andaccounting professionals and financial advisors, at the Debtor'sexpense. They may investigate the Debtor's business and financialaffairs. Importantly, official committees serve as fiduciaries tothe general population of creditors they represent. Thosecommittees will also attempt to negotiate the terms of aconsensual chapter 11 plan -- almost always subject to the termsof strict confidentiality agreements with the Debtors and othercore parties-in-interest. If negotiations break down, theCommittee may ask the Bankruptcy Court to replace management withan independent trustee. If the Committee concludes reorganizationof the Debtor is impossible, the Committee will urge theBankruptcy Court to convert the Chapter 11 cases to a liquidationproceeding.

About Samaritan Hospital

Based in Lexington, Kentucky, Samaritan Alliance, L.L.C., dbaSamaritan Hospital, provides a range of health and wellnessservices. The company and its affiliates filed for chapter 11protection on April 16, 2007 (Bankr. E.D. Ky. Case No. 07-50735).W. Thomas Bunch, II, Esq., and Thomas Bunch, Sr., Esq., at Bunch &Brock, represent the Debtors. When the Debtors filed forprotection from their creditors, they listed total assets of$21,054,795 and total debts of $25,645,512.

SAMARITAN HOSPITAL: Panel Retains Frost Brown as Counsel--------------------------------------------------------The United States Bankruptcy Court for the Eastern District ofKentucky has granted the request of the Official Committee ofUnsecured Creditors appointed in Samaritan Alliance LLC dbaSamaritan Hospital and its debtor-affiliates' bankruptcy cases tofor authority to retain Frost Brown Todd LLC as its legal counsel.

As counsel, Frost Brown is expected to:

-- advise the Committee with respect to its powers, duties and responsibilities in these cases;

-- provide assistance in the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of the Debtors' business and desirability of the continuance of such business, and any other matters relevant to the cases or to the negotiation and formulation of a plan;

-- prepare on behalf of the Committee all necessary pleadings and other documentation;

-- advise the Committee with respect to the Debtors' formulation of a plan(s), the Debtors' proposed plans with respect to the prosecution of claims against various third parties and any other matters relevant to the cases or to the formulation of a plan(s), in these cases;

-- provide assistance, advice and representation, if appropriate, with respect to the employment of a Trustee or Examiner, should such action become necessary, or any other legal decision involving interests represented by the Committee;

-- represent the Committee In hearings and proceedings involving the Committee; and

-- perform such other legal services as may be necessary and in the interest of the creditors and this Committee.

To the best of the Committee's knowledge, as sworn to by Ronald E.Gold, Esq., a member of Frost Brown Todd LLC, the law firm doesnot hold or represent any interest adverse to the Committee, theDebtors or the Debtors' estates, and that each of the law firm'smembers, counsel and associates is a "disinterested person" asthis is defined under under Sec. 101 (14) of the Bankruptcy Code.

About Samaritan Alliance

Based in Lexington, Kentucky, Samaritan Alliance, L.L.C., dbaSamaritan Hospital, provides a range of health and wellnessservices. The company and its affiliates filed for chapter 11protection on April 16, 2007 (Bankr. E.D. Ky. Case No. 07-50735).W. Thomas Bunch, II, Esq., and Thomas Bunch, Sr., Esq., at Bunch &Brock, represent the Debtors. When the Debtors filed forprotection from their creditors, they listed total assets of$21,054,795 and total debts of $25,645,512.

SEA CONTAINERS: Court Sets July 16 as Deadline for Filing Claims----------------------------------------------------------------The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for theDistrict of Delaware established July 16, 2007, 5:30 p.m. E.S.T.,as the deadline for all persons and entities holding or wishing toassert a claim against Sea Containers, Ltd. and its debtor-affiliates, to file a proof of claim in their Chapter 11 cases.

Persons or entities who need not file proofs of claim include:

* any person or entity that already has filed a signed proof of claim against the applicable Debtor with either BASIC or the Clerk of the Bankruptcy Court for the District of Delaware in a form substantially similar to Official Bankruptcy Form No. 10;

* any person or entity who does not dispute its Claim as listed on the Debtors' Schedules of Assets and Liabilities;

* any holder of a claim that previously has been allowed by a Court order;

* any holder of a claim that has been paid in full by any of the Debtors in accordance with the Bankruptcy Code or a Court order;

* any holder of a claim for which a specific deadline previously has been by the Court;

* any Debtor asserting a claim against another Debtor;

* any direct or indirect non-debtor wholly-owned subsidiary of a Debtor asserting a claim against a Debtor;

* any holder of a claim allowable under Section 503(b) and 507(a)(2) as an expense of administration;

* any professional retained by the Debtors or Court-approved Committees who asserts administrative claims for fees and expenses;

* any current officer or director of any Debtor asserting indemnification, contribution or reimbursement claims;

* any holder of a claim arising with respect to any of these issuances of Sea Containers Ltd. public notes:

Headquartered in Hamilton, Bermuda, Sea Containers Ltd. --http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda,the company has regional operating offices in London, Genoa, NewYork, Rio de Janeiro, Sydney, and Singapore. The company isowned almost entirely by United States shareholders and itsprimary listing is on the New York Stock Exchange (SCRA andSCRB) since 1974. On Oct. 3, the company's common shares andsenior notes were suspended from trading on the NYSE and NYSEArca after the company's failure to file its 2005 annual reporton Form 10-K and its quarterly reports on Form 10-Q during 2006with the U.S. Securities and Exchange Commission.

Through its GNER subsidiary, Sea Containers Passenger Transportoperates Britain's fastest railway, the Great North EasternRailway, linking England and Scotland. It also conducts ferryoperations, serving Finland and Estonia as well as a commuterservice between New York and New Jersey in the U.S.

The Official Committee of Unsecured Creditors and the FinancialMembers Sub-Committee of the Official Committee of UnsecuredCreditors of Sea Containers Ltd. is represented by William H.Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'sOfficial Committee of Unsecured Creditors is represented byattorneys at Willkie Farr & Gallagher LLP.

In its schedules filed with the Court, Sea Containers Ltd.disclosed total assets of $62,400,718 and total liabilities of$1,545,384,083.

The Debtors' exclusive period to file a chapter 11 plan ofreorganization expires today, June 12, 2007.

On March 12, 2007, UnitedHealth Group Inc. (NYSE:UNH; A/Stable/A-1) announced its plans to acquire Sierra for $2.6 billion in anall-cash deal.

"At that time, we put our rating on Sierra on CreditWatch positivebecause we viewed this deal as being beneficial to Sierra, and wecontinue to do so," said Standard & Poor's credit analyst JosephMarinucci. Sierra will become part of a significantly largerenterprise with a much stronger business and financial profile.

The transaction, which is subject to numerous regulatoryapprovals, is expected to close by the end of 2007. "Uponclosing, we expect to raise the ratings on Sierra to the samelevel as the counterparty credit rating on UNH because we willview Sierra as core to UNH," Mr. Marinucci added.

SURGILIGHT INC: March 31 Balance Sheet Upside-Down by $625,891--------------------------------------------------------------SurgiLight Inc. reported a net loss of $137,258 on revenue of$119,000 for the first quarter ended March 31, 2007, compared witha net loss of $294,845 on zero revenue for the same period in2006.

Equipment sales for the quarter ended March 31, 2007, increased to$119,000 from $0 during the quarter ended March 31, 2006. The2007 quarter revenue increase was due to the company continuing todevelop its international sales and marketing activities,especially in the European Community where it received CE approvalduring February 2005.

At March 31, 2007, the company's balance sheet showed $4,895,810in total assets, $5,521,701 in total liabilities, resulting in a$625,891 total stockholders' deficit.

The company's balance sheet at March 31, 2007, also showedstrained liquidity with $694,509 in total current assets availableto pay $5,521,701 in total current liabilities.

The B1 Corporate Family Rating considers the highly leveragedposition, modest size and concentration within the refractive lensmarket.

"Pro forma for the increased debt resulting from the new creditfacility, the company's adjusted debt to EBITDA was 5.5 times forthe twelve months ended March 31, 2007", said Sidney Matti,Analyst at Moody's. "Moody's expects that the company's adjusteddebt to EBITDA will decline to 5 times which would place thecompany within the B1 rating category", Matti further states.

For the 12 months ended March 31, 2007, the company generatedapproximately $287 million in revenues, which Moody's anticipateswill slightly grow in the next few years. Of the company's totalrevenues for the most recent twelve months ended March 31, 2007,the refractive segment generated approximately 70% of theconsolidated revenues. Over the past few years, the company'srefractive segment has been the main revenuegenerator of TLC Vision. Moody's anticipates that this willcontinue over the near term as the centers are revamped with a newmarketing strategy.

The Corporate Family Rating acknowledges TLC Vision's strongcompetitive position within the highly fragmented refractivemarket and stable cash flow generation. Pro forma for theadditional debt, the company's free cash flow to adjusted debt wasapproximately 6% at Dec. 31, 2006, which Moody's expects to remainabove 5% over the intermediate term. That would compare favorablyto other B1 rated companies. TLC Vision is currently the leadingcompany within the refractive industry. Over 50%of the market is currently serviced by independent surgeons withthe corporate market controlling less than 30% of the entirerefractive industry.

The stable ratings outlook anticipates the refractive market willcontinue to grow over the intermediate term primarily driven bythe acceptance of LASIK surgery as an alternative to other eyecareproducts (e.g. eyeglasses, contact lenses). With its significantposition within the LASIK surgery market, TLC Vision shouldbenefit from this growth. The outlook also considers that thecompany will not engage in a material debtfinanced acquisition or additional shareholder friendly activitiesover the ratings horizon.

The SGL-2 rating recognizes that over the next twelve months endedMarch 31, 2008, Moody's expects TLC Vision to generate cash flowfrom operations sufficient to cover the company's capital spendingneeds. Additionally, the company is expected to have fullavailability under the proposed $25 million revolving creditfacility.

These ratings were assigned:

-- B1 Corporate Family Rating;

-- B2 Probability of Default Rating;

-- SGL-2 Speculative Grade Liquidity Rating;

-- B1 (LGD3/31%) rating on $25 million Senior Secured Revolver due 2012; and

-- B1 (LGD3/31%) rating on $85 million Senior Secured Term Loan due 2013.

Headquartered in Missississauga, Ontario, Canada, TLC VisionCorporation is a diversified eye care services company with amajority of the company's revenues generated from laser refractivesurgery, which involves an excimer laser to treat commonrefractive vision disorders such as myopia (nearsightedness),hyperopia (farsightedness) and astigmatism. For the 12 monthsended March 31, 2007, the company generatedapproximately $287 million in revenues.

At the same time, S&P assigned loan and recovery ratings to TLCVision (USA) Corp.'s $110 million secured financing. The debt,which consists of a $25 million revolving credit facility (five-year maturity) and an $85 million term loan B (six-year maturity)is rated 'BB-' (two notches higher than the corporate creditrating on TLCV) with a recovery rating of '1', indicatingexpectations for very high (90%-100%) recovery in the event of adefault. TLC Vision (USA) is a wholly owned subsidiary of TLCV,the guarantor of the debt.

"Proceeds of the financing will be used, in combination with cashon hand, to fund the repurchase of up to 20 million shares ofoutstanding stock," explained Standard & Poor's credit analystCheryl Richer.

The rating on TLCV reflects its concentration in laser visioncorrection. As a corporate provider, TLCV competes with privatepractice ophthalmologists and hospitals, which together performabout 60% of U.S. refractive surgery procedures.

In addition, consumers have less invasive and less expensiveoptions for vision correction, such as eyeglasses and contactlenses. Furthermore, refractive surgery has exhibited slower-than-anticipated growth, with several years of flat demand, sinceits inception 17 years ago; refractive surgery is used for lessthan 4% of vision correction. These risks are offset byimprovements in the technology, which may increase demand; risingcost of the equipment, which encourages surgeons to performsurgeries at TLCV centers; the necessity of a growing and agingpopulation for vision care services; and TLCV's leading positionin this fragmented market. The company's financial risk profileis commensurate with the rating.

TWEETER HOME: Files for Chapter 11 Protection in Delaware---------------------------------------------------------Tweeter Home Entertainment Group, Inc., disclosed that to addressits financial challenges and support its ongoing efforts to evolveits home installation and services business model, the company andseven of its affiliates, on June 11, 2007, filed voluntarypetitions for reorganization under Chapter 11 of the United StatesBankruptcy Code with the U.S. Bankruptcy Court for the District ofDelaware.

Tweeter has taken this action after determining that a Chapter 11reorganization is in the best long-term interest of the Company,its employees, customers, creditors, business partners and otherstakeholders.

Tweeter also announced that it has secured a $60 million secureddebtor-in-possession credit facility provided by General ElectricCapital Corporation.

Tweeter, through a first day motion, will seek immediate authorityto access that post-petition credit facility. Tweeter intends touse the post-petition liquidity to purchase merchandise, payemployee salaries and benefits and for other general corporatepurposes.

In conjunction with the filing of its bankruptcy petition, thecompany filed a variety of "first day motions" :

* to support its employees, vendors, customers and other stakeholders;

-- Honor its customer service policies such as returns, exchanges, credits and layaway programs at each store location;

-- Pay vendors, suppliers and other business partners for goods and services provided post-petition; and,

-- Continue to pay employee wages and salaries, offering the same medical, dental, life insurance, disability and other benefits and to accrue vacation and discretionary time without interruption.

"After considering a wide range of alternatives, it became clearthat this course of action was a necessary and responsible steptoward preserving Tweeter's viability as we address our financialchallenges and work to secure our future," said Tweeter Presidentand CEO Joe McGuire. "I am confident that, with our tremendoustalent pool of the best-trained, most knowledgeable sales andinstallation teams in the business, we will emerge from thisprocess as a stronger, more competitive organization that is well-positioned to respond to and succeed in the ever-changing consumerelectronics industry."

W&T OFFSHORE: Prices $450 Million 8.25% Senior Notes Offering-------------------------------------------------------------W&T Offshore Inc. has priced approximately $450 million of its8.25% senior notes due 2014. The interest payment dates on theNotes are June 15 and December 15, with interest paymentscommencing on Dec. 15, 2007.

The Notes are scheduled to mature on June 15, 2014. The sale ofthe Notes is expected to close on Wednesday, June 13, 2007. Theproceeds of the offering will be used to repay borrowings underthe company's credit agreement.

The Notes have not been and will not be registered under theSecurities Act of 1933, as amended, and are being offered and soldin the United States only to qualified institutional buyers inreliance on Rule 144A under the Act and to certain non-U.S.persons in transactions outside the United States in reliance onRegulation S under the Act.

W&T Offshore Inc. -- http://www.wtoffshore.com-- is an independent oil and natural gas company focused primarily in theGulf of Mexico, including exploration in the deepwater and deepshelf regions.

* * *

As reported in the Troubled Company Reporter on June 7, 2007,Moody's assigned a B3 rating (LGD5; 76%) to W&T Offshore Inc.'spending $450 million senior unsecured note offering and affirmedthe company's B2 corporate family rating.

WERNER LADDER: Completes Sale of All Assets to Investor Group-------------------------------------------------------------Werner Holding Co. (DE) Inc. aka Werner Ladder Company and itsdebtor-affiliates yesterday said that the sale of substantiallyall of its assets to a group of the company's investors wascompleted.

This sale transaction, approved by the United States BankruptcyCourt for the District of Delaware on April 25, 2007, allowsWerner's ladder business to successfully emerge from bankruptcyand continue its operational turnaround.

James J. Loughlin, Jr., Werner's interim Chief Executive Officer,said, "We are very pleased that this transaction has closed andWerner will successfully emerge from bankruptcy. The new Wernerwill continue to operate its business of making and selling thecountry's best ladders. We have substantially reduced our debt asover $300 million of liabilities have been extinguished. Wernerwill benefit from improved liquidity that will allow the companyto serve its customers, complete its operational restructuring andcontinue to improve sales and profitability."

Mr. Loughlin added, "Werner is well positioned for future success.We have reduced our operating costs while continuing to improveand expand our product offerings and we are well on our way tobecoming the most profitable ladder manufacturer. The company'snew products continue to win awards for innovation while servingunfilled needs in the climbing product marketplace. Themanagement and employees of Werner are committed to serving ourcustomers and teaming with our suppliers and other businesspartners to remain the leader in each of our product segments."

Brencourt Advisors, LLC was formed in 2001 as a registeredinvestment advisor to various alternative investment funds.Brencourt currently manages approximately $2 billion in assets andhas offices in both New York and London, U.K.

About Levine Leichtman Capital

Levine Leichtman Capital Partners -- http://www.llcp.com/-- is a Los Angeles, California private equity firm that was founded in1984 by Arthur E. Levine and Lauren B. Leichtman. The firmmanages in excess of $2.0 billion of institutional investmentcapital through private equity partnerships. LLCP has a highlydifferentiated, multi-fund investment strategy focused oncompanies with revenues less than $500 million.

About Schultze Asset

Founded in 1998, Schultze Asset Management, LLC --http://www.samco.net/-- is a leading alternative investments firm specializing in distressed and special situations investing. Thefirm manages approximately $750 million in assets on behalf ofinstitutional and high net worth clients located throughout theworld. Schultze's offices are in Purchase, New York.

About TCW Shared

The TCW Shared Opportunity Funds have invested over $1 billion indistressed middle market companies during the past 15 years andare affiliated with Trust Company of the West. Founded in 1971,TCW develops and manages a broad range of innovative, value-addedinvestment products that strive to enhance and protect clients'wealth. The firm has approximately $160 billion in assets undermanagement. TCW is a subsidiary of Societe Generale AssetManagement, which has approximately $500 billion under managementand is a division of Societe Generale Group.

The Debtors are represented by the firm of Willkie Farr &Gallagher LLP as lead counsel and the firm of Young, Conaway,Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is theDebtors' financial advisor. The Official Committee of UnsecuredCreditors is represented by the firm of Winston & Strawn LLP aslead counsel and the firm of Greenberg Traurig LLP as co-counsel.Jefferies & Company serves as the Creditor Committee's financialadvisor. At March 31, 2006, the Debtors reported total assets of$201,042,000 and total debts of $473,447,000.

* Bingham Issues Opinion on Directors' Fiduciary Duty Dispute-------------------------------------------------------------Bingham McCutchen LLP has released an opinion on a long standingdispute in the restructuring arena, concerning whether or notcreditors of an insolvent company have the standing to assertdirect claims against directors for breaches of fiduciary duty.

Background

Bingham McCutchen relates that, sixteen years ago, the DelawareChancery Court roiled America's boardrooms, and intriguedcreditors with a single footnote - suggesting in the famous CreditLyonnais case that when Delaware corporations reach the "vicinityof insolvency" -- which is often called the "zone of insolvency" -- the fiduciary duties of their directors might expand to embracethe corporation's creditors. The firm said that footnote spawnedmountains of confusing analysis, case law, and advice, and,despite the fact that no Delaware court had ever so held, led toacceptance by many of the proposition that a director of aDelaware corporation that is "in the vicinity of insolvency" doesindeed owe fiduciary duties directly to creditors.

On May 18, 2007, the Delaware Supreme Court surprised manycreditors and rejected that proposition, ruling in the case ofNorth American Catholic Educational Programming Foundation, Inc.v. Gheewalla, that a creditor of a Delaware corporation never hasstanding to assert a direct claim against individual directors forbreach of fiduciary duty, relates the firm.

Analysis

The firm confirmed that the North American Catholic opinion makesclear that creditors of Delaware corporations must look forprotection to remedies other than direct claims against directorsfor breach of fiduciary duty. When the facts warrant, creditorsinjured by corporate action may bring nonfiduciary claims (forexample, claims based upon breach of contract, breach of theimplied covenants of good faith and fair dealing, or fraudulentconveyance).

In addition, although there are significant procedural hurdles toovercome, derivative actions remain.

The North American Catholic opinion makes clear that regardless ofwhether a Delaware corporation is solvent, in the so-called "zone"or "vicinity" of insolvency or clearly insolvent, the directorsowe both the corporation and its stockholders fiduciary duties ofcare and loyalty. When a corporation is solvent, the stockholdersare the only beneficiaries of those duties and, depending on thenature of their injury, can sue derivatively or directly toenforce those duties. However, when the corporation is insolvent,the creditors of the corporation acquire standing and, in additionto the stockholders, can sue derivatively to enforce those duties,explains the firm.

Impact

The firm contends that the practical impact of the North AmericanCatholic decision will be worked out both "on the ground" and inlower court decisions, but it certainly changes the landscape forpotential creditor actions based on insolvency and breach ofdirector duty. The firm notes the following:

1) As a practical matter a director's worry about incurring personal liability for damages as a result of a claim by a creditor should be greatly diminished. After North American Catholic, direct claims by creditors against individual directors for breach of fiduciary duty will be virtually impossible. Further, the combination of the business judgment rule and the presence of exculpatory provisions in the certificates of incorporation of nearly every Delaware corporation means that personal liability of a director for derivative claims by creditors based on breach of the duty of care are highly unlikely. Thus the principal remaining risk of personal liability for directors at the instigation of creditors should be in the event of a derivative claim based on breach of the duty of loyalty -- i.e., self dealing or bad faith -- which can be procedurally difficult to maintain, or in the case of an unlawful dividend or stock repurchase.

2) As a result, from the point of view of the directors of a distressed Delaware corporation, the decision may lead to a shift in emphasis, from one of considering the interests of creditors as more significant, to one in which the interests of stockholders in higher-risk business strategies assume greater importance.

3) Nevertheless, the "shot across the bow" letter sometimes fired off by creditors' counsel to directors will still have its place, but the content must bend in light of North American Catholic. Creditors may still threaten derivative claims for breach of duty of care or duty of loyalty, and may also raise legal challenges to directors' decisions based on nonfiduciary theories. Further, the firm thinks that a Delaware director would be well advised to consider outcomes for all constituencies, including creditors, when weighing corporate actions in the face of insolvency. A wise director will want to minimize the threat of a lawsuit, whether it is "direct" or "derivative."

4) Bankruptcy itself may feel the impact. Directors of Chapter 11 debtors may feel more constrained to support, for example, efforts to form and negotiate with equity committees.

The firm settles that the North American Catholic decision is animportant development of Delaware law, and a setback to a theoryaccepted by many in practice of direct director duties tocreditors of an insolvent corporation. It changes the playingfield for lawsuit tactics and remedies for creditors againstindividual directors. The firm tells that a derivative claim by acreditor, a bankruptcy estate or a trustee is no trifling matter,so directors still need to be circumspect, and creditors need notabandon faith as a result of North American Catholic.

About Bingham McCutchen

Based in Walnut Creek, Calfornia, Bingham McCutchen LLP --http://www.bingham.com/-- is an international law firm with 13 offices on three continents. The firm is focused on servingclients in complex financial transactions, a wide variety ofsophisticated corporate and technology matters, and high-stakeslitigation.

Monday's edition of the TCR delivers a list of indicative pricesfor bond issues that reportedly trade well below par. Prices areobtained by TCR editors from a variety of outside sources duringthe prior week we think are reliable. Those sources may not,however, be complete or accurate. The Monday Bond Pricing tableis compiled on the Friday prior to publication. Prices reportedare not intended to reflect actual trades. Prices for actualtrades are probably different. Our objective is to shareinformation, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy orsell any security of any kind. It is likely that some entityaffiliated with a TCR editor holds some position in the issuers'public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies withinsolvent balance sheets whose shares trade higher than $3 pershare in public markets. At first glance, this list may look likethe definitive compilation of stocks that are ideal to sell short.Don't be fooled. Assets, for example, reported at historical costnet of depreciation may understate the true value of a firm'sassets. A company may establish reserves on its balance sheet forliabilities that may never materialize. The prices at whichequity securities trade in public market are determined by morethan a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in eachWednesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Send announcements toconferences@bankrupt.com/

On Thursdays, the TCR delivers a list of recently filed chapter 11cases involving less than $1,000,000 in assets and liabilitiesdelivered to nation's bankruptcy courts. The list includes linksto freely downloadable images of these small-dollar petitions inAcrobat PDF format.

Each Friday's edition of the TCR includes a review about a book ofinterest to troubled company professionals. All titles areavailable at your local bookstore or through Amazon.com. Go tohttp://www.bankrupt.com/books/to order any title today.

Monthly Operating Reports are summarized in every Saturday editionof the TCR.

For copies of court documents filed in the District of Delaware,please contact Vito at Parcels, Inc., at 302-658-9911. Forbankruptcy documents filed in cases pending outside the Districtof Delaware, contact Ken Troubh at Nationwide Research &Consulting at 207/791-2852.

This material is copyrighted and any commercial use, resale orpublication in any form (including e-mail forwarding, electronicre-mailing and photocopying) is strictly prohibited without priorwritten permission of the publishers. Information containedherein is obtained from sources believed to be reliable, but isnot guaranteed.

The TCR subscription rate is $775 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firmfor the term of the initial subscription or balance thereof are$25 each. For subscription information, contact Christopher Beardat 240/629-3300.